CNY-CNH spread unlikely widen significantly

While risk-off sentiment dominates the market, CNH outperformed and gained 0.62% yesterday; with CNY-CNH spread almost disappearing. China has strong incentives to narrow the CNY-CNH spread to push forward RMB's SDR status, notes Commerzbank. 

Historical data suggest when RMB is under pressure to weaken, i.e. CNH is weaker than CNY. Even if the CNY-CNH spread were to widen again, this would unlikely last. Notably, the PBoC (People's Bank of China) commits to a stable exchange rate and tops the SDR inclusion as the priority. For that reason, the CNY-CNH spread will unlikely widen significantly in the near future, says Commerzbank.