A new era of international acceptance of the renminbi will begin when onshore trading of the currency resumes on Monday after a nine-day break when offshore rates neared six-year lows.
Last week’s weakness has pushed the gap between the two rates to a three-month high — something Beijing has been trying to minimise as it seeks to curb capital outflow pressures. A sharply weaker offshore rate sends a signal that international investors are betting on currency weakness and risks triggering renewed capital flight.
Speculation of renewed weakness has grown since China was officially included as a reserve currency alongside the dollar, euro, sterling and the yen by the International Monetary Fund on October 1. Beijing had been keen to limit swings in its currency leading up to that point, but strategists have suggested it could tolerate further weakness now it has succeeded.