Traders often compare speculation with a balloon; squeeze one part and the air just bulges out elsewhere. The analogy is proving increasingly popular in Hong Kong and other offshore renminbi centres as investors face the effects of China’s efforts to suppress renminbi speculation.

Bulges so far have been spotted in a sudden weakening of the Hong Kong dollar as well in corners of the renminbi’s offshore markets from Taipei to Singapore as intervention by China, direct and indirect, has drained liquidity and created arbitrage opportunities.

The authorities’ aim has been to close the awkward “one currency, two rates” gap between the tightly controlled onshore rate and that available offshore, which had been weakening at a faster pace. The divergence between the two rates implies investors outside China were increasingly betting on further weakening — a gamble that had real onshore repercussions if it spurred further capital flight.