CNY is the Chinese yuan as traded inside mainland China under the People’s Bank of China (PBOC) regime. CNH is the offshore yuan traded primarily in Hong Kong, Singapore, and London. The two trade as functionally separate currencies despite representing the same underlying yuan: a CNY in a Beijing bank account is convertible only under SAFE rules, while a CNH in a Hong Kong bank account is convertible freely under offshore market terms. They typically trade at slightly different rates with a spread of 50-200 basis points (sometimes wider during stress periods). For Chinese chemical buyers and sellers, the CNY/CNH spread and the daily PBOC fix are the two FX inputs that determine settlement cost. This entry also covers the related concepts of the USD-CNY fix and the PBOC fix.
CNY vs CNH, the practical differences
| Dimension | CNY (onshore) | CNH (offshore) |
|---|---|---|
| Where traded | Mainland China interbank market | Hong Kong, Singapore, London, Frankfurt, etc. |
| Trading hours | Beijing 9:30-23:30 | 24-hour follow-the-sun |
| Trading band | ±2% from PBOC daily fix | None |
| FX availability | Limited; subject to SAFE rules | Free |
| Typical bid-ask spread | 5-15 basis points | 5-25 basis points |
| Source of liquidity | Domestic Chinese banks | International banks + Chinese bank offshore units |
| Settlement | T+1 typically, T+0 possible | T+0, T+1, T+2 |
Onshore CNY is the official Chinese currency under the State Council’s exchange-rate regime. Offshore CNH is the same yuan but free of mainland regulatory friction.
The PBOC daily fix (USD-CNY central parity)
The People’s Bank of China publishes a daily USD-CNY central parity rate (the “fix”) at 9:15 Beijing time. The fix is calculated based on:
- The previous day’s CNY closing rate
- The price action in major USD-currency pairs overnight
- A counter-cyclical adjustment factor (used since 2017 to dampen excessive depreciation pressure)
The fix is announced and CNY trades begin at 9:30 Beijing time within a ±2% band around the fix. If CNY hits the upper or lower band limit during the day, trading effectively pauses or PBOC intervenes.
For chemical buyers settling cargo:
- A buyer wanting USD-CNY at the fix rate can place an order with their bank for execution at the day’s fix.
- A buyer wanting to lock the fix for a future date can use forward contracts that reference the fix.
- Significant fix movements (e.g. a 0.3% upward fix vs the prior day) signal PBOC’s directional intent and often forecast intra-day CNY movements.
The CNY-CNH spread
The CNY-CNH spread is the gap between onshore and offshore yuan rates. The spread reflects:
| Factor | Effect on spread |
|---|---|
| Capital flow direction | Net outflow widens CNH-weak relative to CNY |
| Hong Kong CNH liquidity | Tighter HK liquidity widens the spread |
| Onshore CNY trading band | A CNY pinned near the band edge produces wider spread vs CNH |
| Cross-border CNY settlement volume | Higher settlement volume narrows the spread |
The spread can be exploited by buyers with both onshore (CNY) and offshore (CNH) accounts. A buyer holding CNH at favourable rates can convert when the spread to CNY is favourable. Most international chemical buyers do not actively trade the spread; they simply use the rate available at their bank at the moment of conversion.
How USD-CNY trading affects chemical settlement
For a US chemical importer paying a USD 500,000 invoice in CNY:
- Spot rate at the moment of payment. Typical 2026 USD-CNY rate ~7.10. The USD 500,000 converts to ~CNY 3,550,000.
- Conversion via NRA account. If the buyer holds USD in an NRA account at a Chinese bank, conversion happens at the bank’s spot rate, typically 50-100 bp inside the spread on the PBOC fix.
- Conversion via offshore (CNH) route. If the buyer holds CNH at an offshore Chinese bank, USD is converted to CNH at the offshore market rate, then CNH is converted to CNY for onshore payment if needed (or paid directly as CNH for international chemical trade).
The choice of conversion route affects the all-in cost by 30-150 basis points on a USD 500,000 transaction (USD 1,500-7,500). For volume buyers, treasury-managed FX execution captures this saving.
The currency stack for Chinese chemical exporters
A Chinese factory exporting to a US buyer typically:
- Quotes in USD for market simplicity
- Receives USD into the factory’s onshore USD account at the issuing or correspondent bank
- Converts USD to CNY for domestic operating expenses, with the CNY proceeds subject to PBOC fix-band rules
- Manages the CNY/USD exposure through forwards or natural hedging (matching the CNY cost base against the USD revenue base)
For a factory exporting in larger volumes, the FX exposure can be significant. Sinosure’s FX-protection products and onshore forwards through major Chinese banks are the typical hedging tools.
How CNY/CNH catches buyers off guard
Three failure patterns recur:
- Settling in CNH when the supplier expects CNY. A buyer paying offshore CNH to a supplier’s Hong Kong account works fine; paying CNH to a supplier’s mainland account fails until the funds are converted to CNY, which costs 50-200 bp.
- Spot rate vs fix rate confusion. A buyer asking the bank for “the fix rate” gets the 9:15 fix, not the spot rate. The two can differ by 10-30 basis points during the day. For large transactions the difference matters; specify which rate the buyer wants.
- Trading band hits. During stress periods (capital outflow surges, US-China tension), CNY can hit its trading band. Conversion at the band-limit rate may not be possible until trading reopens or PBOC intervenes. Buyers with payment-deadline constraints should hold CNH inventory as a buffer.
Related terms
NRA Account is the onshore non-resident account type that holds CNY for chemical-trade settlement. Cross-Border CNY Settlement is the regime that governs CNY flow between onshore and offshore. T/T is the wire-transfer payment method that flows through these accounts. L/C and Fapiao integrate with these currency mechanics in the trade-settlement chain.