The exchange rate forecast for the Indian Rupee (INR) against the Chinese Yuan (CNY) suggests a cautiously optimistic outlook, influenced by recent developments in both economies.
The Reserve Bank of India's (RBI) intervention in mid-October, where it sold between $3 billion to $5 billion to stabilize the rupee, has had a notable impact. Analysts observed that this move resulted in the rupee's largest single-day gain in four months, indicating a shift in market sentiment. The options market reflected this change, with a significant tilt favoring the rupee, as evidenced by the 1-month risk-reversal for the USD/INR pair dropping to its lowest level since 2012. This increase in demand for rupee call options suggests that traders anticipate a stronger INR in the near term, despite lingering challenges from U.S. tariffs on Indian exports.
On the Chinese side, efforts to internationalize the yuan and maintain its stability contribute positively to the CNY. The People's Bank of China is actively promoting the yuan's use in global trade and enhancing the digital yuan to facilitate cross-border transactions. Despite the pressures from U.S. tariffs and a weakening yuan against the Euro, the central bank remains committed to preventing excessive fluctuations in the exchange rate, which is likely to appeal to foreign investors.
Current market data indicates that the INR to CNY exchange rate stands at approximately 0.080331, just 0.7% below its three-month average. This relative stability in the rate, having traded within a narrow 3% range, suggests that the currency pair is experiencing subdued volatility.
Recent economic data from China indicates a recovery, with the economy growing 5.2% in the second quarter of 2025, bolstered by government stimulus. This recovery may support the yuan's strength against other currencies, including the rupee.
In summary, the INR to CNY exchange rate may benefit from the RBI's proactive measures and stronger market sentiment toward the rupee, while the CNY's stability prospects are enhanced by China's focused efforts on economic recovery and yuan internationalization. As these dynamics evolve, companies and individuals dealing in these currencies should remain vigilant and consider leveraging the current market conditions to optimize their foreign exchange transactions.
