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What Drives CNH Market Equilibrium?

<p>A woman walks past an advertisement promoting China&#8217;s renminbi (RMB) or yuan services outside the Bank of China headquarters in Hong Kong on July 26,2011.</p>
A woman walks past an advertisement promoting China’s renminbi (RMB) or yuan services outside the Bank of China headquarters in Hong Kong on July 26,2011. (Tyrone Siu/Reuters)
  • Peter Garber
    Global Strategist, Global Markets Research, Deutsche Bank

Overview

The recent rapid growth of the offshore renminbi market presents a puzzle for analysts of China’s development strategy. By allowing renminbi to flow offshore uncontrolled before loosening government controls over internal financial markets, Chinese officials are straying from the normal sequence of steps toward currency internationalization. Why might that be? In this Center for Geoeconomic Studies Working Paper, produced in association with CFR’s International Institutions and Global Governance program, Peter Garber seeks to answer that question by investigating what drives offshore renminbi markets and how they are evolving.t

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