INR to CNY Exchange Rates: Trend, Development and Impact on India-China Trade

Ⅰ. INR to CNY Exchange Rate Trend

According to the latest data and analysis, the exchange rate of Indian Rupee (INR) to Chinese Yuan (CNY) has shown minor fluctuations recently, while the future trend may be influenced by multiple factors. As of March 27, 2025, 1 CNY is approximately equal to 11.929 INR (i.e. 1 INR is approximately 0.08433 CNY). In the short term, the exchange rate from February to March 2025 was less volatile overall, with the exchange rate fluctuating between 0.0830 and 0.0843 CNY/INR over the last 30 days, with an average value of 0.0834, a slight increase of 0.76% compared to the previous period, while the 90-day trend showed a range of 0.0830 to 0.0857 CNY/INR, with an average value of about 0.0841, an an overall decline of 1.64%.  

Throughout history, the CNY has shown an appreciating trend against the INR over the past year, which is related to the relatively stable performance of the Chinese economy and the weakness of the INR. The Indian rupee has been a weaker performer among Asian currencies, especially against the US dollar, which has declined by about 12%, which has indirectly affected its exchange rate against the Chinese yuan.  

Regarding the future trend, forecasts indicate that during the period from April to December 2025, the INR may show a downward and then upward trend against the CNY. Specifically, the exchange rate is expected to decline slightly from 11.86 to 11.79 in April 2025, rebound to 11.86 in May, rise further to 12.08 in June, increase slightly to 12.13 in July, and may fall back to 11.86 from August to September. subsequently, the exchange rate may climb again from October to December, and is forecasted to reach 12.34 by the end of December, with the overall fluctuating upward trend.  

 

Ⅱ. How will the change in exchange rate from inr to cny affect foreign trade between the two sides?

Changes in the exchange rate between the Indian rupee (INR) and the Chinese yuan (CNY) will have a multifaceted impact on the foreign trade relationship between China and India, mainly involving the export competitiveness of both sides, the cost of imports, the balance of trade and policy adjustments in a number of areas.

1. The cost of imports for India

For India, exchange rate fluctuations directly affect the competitiveness and cost of its exports and imports. If the RMB depreciates relative to the rupee, the INR/CNY exchange rate rises, the price advantage of Chinese goods in the international market strengthens, which may squeeze the export space of similar products in India. Conversely, if the rupee depreciation, India's imports of raw materials, machinery and equipment from China will rise in cost, may push up domestic production prices and expand the trade deficit. In addition, the appreciation of the rupee will reduce the cost of India's imports of Chinese goods, but at the same time may also weaken the price competitiveness of India's exports (such as software services, pharmaceutical products) in the Chinese market, resulting in a reduction in rupee-denominated income.

2. The cost of imports for China

For China, RMB appreciation or depreciation is likewise a double-edged sword. RMB depreciation will help enhance the price competitiveness of China's exports such as industrial products and electronics in the Indian and global markets, thereby expanding market share; however, if the RMB appreciates, China's exports to India may face the risk of reduced demand due to higher rupee-denominated costs. On the import side, RMB appreciation will reduce the cost of agricultural products, minerals and other raw materials purchased from India, which will help balance the bilateral trade deficit. However, due to China's diversified import structure and ample foreign exchange reserves, the impact of exchange rate fluctuations on its overall economy is relatively limited.

From a more macro perspective, exchange rate changes will also affect the two countries' trade policies and global economic positions. While India may reduce its dependence on the US dollar or renminbi by adjusting tariffs and promoting local-currency-settled trade, China can leverage the renminbi's internationalization process, such as expanding cross-border payments and gold reserves, to consolidate its global trade influence. In addition, exchange rate volatility has prompted firms in both countries to take countermeasures, such as utilizing financial instruments to hedge their risks or diversifying their markets to reduce their dependence on a single region. Governments need to stabilize the foreign trade environment through monetary policy regulation and interest rate adjustments, and trade policy support and tariff subsidies.

The volatility of the exchange rate between the Indian rupee and the Chinese yuan is influenced by a combination of multi-dimensional factors, which include both the domestic economic fundamentals of the two countries, but also involves the global market environment and policy regulation. 

1.Economic Growth

In terms of economic fundamentals, the difference in economic growth between the two countries is one of the core influencing factors. If China's economic growth is strong, it tends to attract more foreign capital inflows and push the appreciation of the RMB; conversely, if India's economic performance is outstanding, it may enhance market demand for the rupee. In addition, the difference in inflation rates between the two countries is also crucial. High inflation usually weakens the real purchasing power of the currency, leading to depreciation pressure.

Monetary policy regulation is another key factor. The interest rate decisions of the two central banks have a direct impact on the attractiveness of the currencies, with interest rate hikes usually attracting capital inflows and pushing up the exchange rate of the local currency. Meanwhile, adjustments in the money supply can also have a significant impact, and expansionary monetary policy may lead to a depreciation of the local currency. Notably, both central banks may stabilize the exchange rate through interventions in the foreign exchange market, a direct market operation that can often influence exchange rate movements in the short term.

 

The global market environment constitutes the external framework for exchange rate volatility. The movement of the U.S. dollar, as the dominant global currency, significantly affects the exchange rates of the INR and the CNY, and a stronger dollar tends to lead to relative depreciation of other currencies. At the same time, monetary policy adjustments by the Federal Reserve, international commodity price fluctuations, and global capital flow trends all have cascading effects. For example, when global risk aversion heats up, investors may increase their holdings of relatively stable currencies such as the RMB, thus affecting the exchange rate ratio.

In addition, market expectations and psychological factors should not be ignored. Investors' preconceptions of the economic outlook of the two countries, assessment of policy continuity, and speculative behavior in the foreign exchange market may trigger short-term fluctuations in the exchange rate. Political stability is equally critical, and policy uncertainty could erode investor confidence and lead to currency depreciation.

 

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