China’s renminbi seems largely resilient a year after its sudden devaluation. The currency has weakened by only a couple of per cent against the dollar this year as the Federal Reserve has refrained from raising interest rates.

The People’s Bank of China’s foreign reserves have stopped falling and the spread between China’s onshore and offshore exchange rates has almost vanished.

The currency’s resilience, however, is unlikely to last. In particular, the amount of offshore renminbi deposits, having peaked last year when the currency was devalued, has continued to shrink this year despite the exchange rate becoming more stable again. The diminishing size of the offshore market is the canary in the coalmine, signalling that renewed currency turbulence is likely in future.