A Strong Yuan and a Weak Rupee Squeeze an Indian Cell Buyer From Both Ends

Written 11 September 2026, on PBOC fixings and trade data reported in early September, and ING and UBP commentary on renminbi policy.

The offshore yuan has been trading around 6.70 to the dollar, its strongest since January 2023, up about 0.6 per cent in a month and 5.8 per cent over a year. The People’s Bank of China has been guiding the daily fix higher rather than resisting the move.

Chinese exports rose 25.0 per cent year on year in August to $401.44 billion, with imports up 28.2 per cent. A strengthening currency alongside accelerating exports is not the usual combination.

Most of the world’s lithium cells are made in China. An Indian buyer usually transacts in dollars, which makes it easy to miss that the underlying cost base is in renminbi — and a stronger yuan raises the dollar price a Chinese manufacturer needs to earn the same revenue at home.

It does not pass through immediately. Manufacturers hold dollar prices through contract periods, absorb margin, and compete hard for volume. But a sustained 5 to 6 per cent currency move does not stay absorbed indefinitely, and it arrives on top of Chinese manufacturers already raising storage cell prices and a new 2 per cent consumption tax on lithium-ion batteries from 1 September 2026.

• •Exports are growing at 25 per cent regardless, so a weak currency is not needed to defend competitiveness
• •A stronger, more stable renminbi supports the internationalisation agenda and its use in trade settlement
• •Investors are using the yuan as a carry-trade funding currency, which itself reflects confidence in stability
• •A stronger currency cheapens imported commodities — useful when copper, aluminium and oil are all elevated

That last point is a neat symmetry: China is paying less in renminbi for the record-priced copper everyone else is paying more for.

The same discipline that applies to the rupee. A cell order placed today for delivery in six months carries currency risk on both legs, and the honest way to quote it is with a hedge, an escalation clause, or an explicit dated assumption.

Longer term it is one more entry in the argument for Indian cell manufacturing — not because domestic cells would be cheaper today, but because a rupee cost base removes an exposure that is currently unmanaged in most procurement. Our coverage of India’s cell manufacturing gap sets out how far that is from being closed.