Currently the spread between the onshore and offshore markets for the yuan has been growing, arbitrage activities has become more active and the capital to short sell RMB remains a powerful force.

This continues to cost China's foreign exchange reserve, resulting in capital outflows and posing a threat to the smooth economic operation in the country.

ANBOUND’s research team is of the view that China’s financial regulatory departments should first consider to intervene at the offshore markets and increase the efforts to combat arbitrage activities.

Secondly, it is important to combine various efforts to stabilize the market expectations on RMB exchange rate and to reduce the market misunderstanding and unwarranted speculation on RMB exchange rate.