-Investors shakenas renminbis reputation as one-way bet soursLast week the renminbi did something it has not done for years it shocked the market.During the final three trading sessions of the week, the Chinese currency dropped as much as 1.3 per cent against the US dollar, marking its biggest three-day fall since 2021. The renminbi is now 0.6 per cent weaker against the dollar than it was at the start of the year.While the percentage decline may appear small pared with some of the recent double-digit swings in other emerging market currencies such as the Argentine peso or Kazakh tenge, a move of such magnitude in the renminbi is highly unusual.It could also spell trouble for investors. After years of ultra-low volatility thanks to the managed peg against the dollar, the renminbi has often been the subject of large, highly-leveraged positions for investors viewing it as an effective one-way bet. ANZs Patrick Perret-Green said the sell-off had left some speculative investors with a very bloody nose.Mitul Kotecha, F* strategist at Crdit Agricole CIB, said that last weeks move could be a signal of a shift in Chinese currency policy.The market was e*tremely long, and weve seen a big shakeout of these positions, said Mr Kotecha. They want to try and at least provoke more risk and more uncertainty in taking this trade. They are going to keep engineering volatility until that bees the case.The sharp move follows a period during which the offshore renminbi rate has been trading at an increasing premium to the onshore rate. That split a permanent feature of the market is something made possible by Chinas strict controls on its capital account.Global investors usually take bets on the currency through its Hong Kong iteration, known by the shorthand H. Within China, panies and investors use the official onshore rate, or Y.Early last week, the H rate had reached its biggest spread over the Y rate since 2021, suggesting that international enthusiasm for the renminbi had overtaken that from within China itself.Currency analysts say this widening gap may have prodded the Peoples Bank of China into action. The central bank sets the daily fi*ing rate around which the renminbi is permitted to fall or gain 1 per cent a day, and last week it guided the onshore currency weaker through higher fi*es.Some believe that the move by the PBoC to damp appreciation e*pectations is part of its wider, long-held aim of introducing more two-way volatility into the market.It could also be an attempt to bring the onshore and offshore rates together before the central bank widens the daily trading band, something it has promised to do soon. The band was last changed in April 2021, when it was doubled from 0.5 per cent.This is a tactical move by the central bank to introduce more volatility before widening the trading band. They are creating conditions for that to happen, said Shuang Ding, China economist at Citi. If the currency continues to appreciate and there is very little volatility, it will only fuel speculation of more appreciation.Weaker economic data out of China may also have played its part in the sell-off. Last week HSBCs flash inde* of manufacturing activity fell to its lowest level in seven months, a sign that the countrys e*port engine is yet to fire up this year. Sentiment towards China has also been hit by growing troubles in the countrys vast shadow banking sector.Many analysts believe the longer-term story of renminbi appreciation remains intact. HSBC still e*pects the renminbi to reach Rmb5.98 against the dollar by the end of the year, equivalent to about a 2 per cent gain from Mondays spot rate.And unlike in previous periods of renminbi weakness such as in the summer of 2021 this most recent bout has not been acpanied by large capital outflows from the country.If anything, the opposite is true the most recent data show that money continues to pour in, with Chinas trade surplus growing by $32bn in January.However, some believe that the apparent shot across the bow by the PBoC means that the days of low volatility are finally ing to an end.Based on how the offshore renminbi has been trading over the past couple of days, it is clear to me that the Chinese currency is no longer a safe haven, Socit Gnrales Benoit Anne wrote in a report.Two UK banks diverging fortunes, the latest EU-Greece banking spat, and US holding pany requirements for foreign banks Feb 24, 2021 - 3:43 pmThe banking team discusses the varying fortunes of HSBC and RBS, the latest spat between the EU and Greece over the treatment of the Greek banking system, and Deutsche Bank reveals some details about how it will cope with the new obligation for foreign banks operating in the United States to have a US holding panies. Patrick Jenkins is joined by Martin Arnold,banking editor; Sam Fleming, financial policy correspondent; Daniel Schfer, investment banking correspondent, a