The market bias for the INR to CNY exchange rate is currently bearish.
Key drivers include a widening interest rate differential, as China signals cautious monetary easing while India is projected to weaken against the US dollar. The Indian economy faces potential depreciation pressures, while the Chinese yuan shows signs of strength from trade surpluses and stable policy. Inflation concerns in India continue to pose risks, while China's growth is improving thanks to robust government stimulus.
In the near term, the exchange rate is expected to trade within a range, influenced by recent fluctuations with the INR trading near 14-day lows against the CNY. An upside risk could arise if trade negotiations between India and China yield positive outcomes, while a downside risk may stem from ongoing pressures in India's economy that exacerbate exchange rate weaknesses.