RMB gaining offshore and onshore

The RMB touched its highest level in seven months offshore, soaring as much as 1.1% on Wednesday alone, despite analyst forecasts for declines this quarter. Surging interbank rates are squeezing bears by driving up the cost of short positions. The rally, which broke months of calm against the dollar, came on the heels of an unwelcome credit-rating downgrade from Moody’s Investors Service. China made its displeasure clear, calling the move “absolutely groundless.” According to Bloomberg, the central bank had already been battling pessimistic traders by repeatedly strengthening the daily fixing, while an opaque change to the setting announced Friday added to the complexity of betting on future movements. The onshore yuan gained 0.5% to 6.8170 per dollar in Shanghai on Wednesday, after fluctuating in a narrow band around 6.9 for most of this year.