This paper examines exchange-rate volatility in India and China from 2010–2024 and evaluates its implications for bilateral trade and economic stability. While extensive research exists on exchange-rate dynamics in individual emerging economies, limited comparative analysis has been conducted on the asymmetric volatility between the Indian rupee (INR) and the Chinese yuan (CNY), and its effects on India–China trade relations. Using quarterly data on INR/USD, CNY/USD and INR/CNY exchange rates, combined with GDP, inflation and trade indicators, this study compares volatility patterns and investigates how major global shocks influence the two currencies differently. The analysis shows that India’s flexible exchange-rate regime produces consistently higher volatility, especially during periods of international financial stress, whereas China’s managed-float framework ensures greater currency stability. These asymmetries have tangible economic implications: heightened INR volatility undermines India’s export competitiveness, increases import costs, and contributes to a widening trade deficit, while China’s stable currency environment supports predictable pricing and resilient trade flows. The study concludes that managing exchange-rate volatility is essential for enhancing India’s competitiveness and economic stability in its trade relationship with China.