Goldman Sachs says yuan 20% undervalued, lifts forecasts to 6.50 in a year
At a Glance
Lead — Goldman Sachs' recent analysis underscores a significant undervaluation of the Chinese yuan, estimating it to be over 20% lower against the US dollar. The bank has revised its forecasts upward, projecting the yuan to strengthen to 6.80 in three months, 6.70 in six months, and 6.50 in a year, driven by structural economic factors rather than short-term events. Per the full note source, this perspective is supported by China's unprecedented external surplus and improving market conditions. The convergence of forecasts from major firms like Goldman and JPMorgan suggests a broader market shift towards yuan appreciation, which could have substantial implications for dollar positioning and commodity markets.
Key Takeaways
- 01Goldman Sachs sees yuan as >20% undervalued, upgrades forecasts to 6.80 (3m), 6.70 (6m), 6.50 (1y) from prior 6.85/6.80/6.70.
- 02The case for appreciation is structural, based on China's external surplus and export competitiveness, not just US-China relations.
- 03JPMorgan Asset Management also predicts further yuan gains, with a potential Trump-Xi summit catalyst to 6.50.
Full Analysis
What the desk is arguing
Goldman Sachs argues the Chinese yuan is fundamentally undervalued by more than 20% against the dollar, making a case for sustained appreciation driven by structural economic forces rather than short-term events. The bank has upgraded its USD/CNY forecasts to 6.80 in three months, 6.70 in six months, and 6.50 in a year, up from previous targets of 6.85, 6.80, and 6.70.
The new forecasts are supported by China's external surplus approaching unprecedented levels as a share of global GDP, reflecting deep export competitiveness. Goldman also notes recent PBoC daily fixings and rising exporter conversion ratios as evidence of a gradual but sustained appreciation path.
This view implicitly rejects the notion that yuan strength is purely event-driven, such as a potential Trump-Xi summit. Instead, Goldman sees the undervaluation as persistent and longer-lasting, with appreciation likely regardless of diplomatic outcomes.
Market Implications
Goldman's bullish yuan call reinforces expectations for further USD/CNY downside, supporting Asian FX and EM assets. The upgrade may prompt other banks to revise targets, adding to dollar-weakening sentiment. For USD/CNY options, implied volatility could rise on increased appreciation expectations. If realized, a move to 6.50 would represent a significant shift from current levels near 6.80, impacting trade flows and corporate hedging strategies.
From the original
Goldman Sachs says the yuan is more than 20% undervalued against the dollar and has upgraded its forecasts to 6.80 in three months, 6.70 in six months and 6.50 in a year. Summary: Goldman Sachs estimates the Chinese yuan is more than 20% undervalued against the US dollar, with th
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4 itemsGoldman Sachs sees Chinese yuan 20% undervalued, raises forecasts - Crypto Briefing
Goldman Sachs has identified the Chinese yuan as being approximately 20% undervalued, prompting the bank to revise its forecasts upward. This assessment suggests that the yuan may be undervalued relative to its fundamentals, highlighting potential upside in the currency's trajectory as global economic conditions evolve. Per the full note [source], this valuation adjustment could influence market sentiment and positioning for both domestic and international investors as they recalibrate their expectations. Given the lack of significant upcoming economic events in China's calendar, market responses may be driven more by these valuation insights and the resulting speculative flows.
USD/CNY To Fall To 6.50 In 12 Months: Goldman Sachs - Exchange Rates Org UK
Lead — Goldman Sachs has projected that the USD/CNY exchange rate will decline to 6.50 over the next 12 months, indicating a bearish outlook on the yuan. Per the full note from Exchange Rates Org UK, this forecast reflects broader expectations for the Chinese economy to stabilize, alongside potential easing measures from the People's Bank of China (PBoC). The desk anticipates that these dynamics could drive further yuan appreciation against the dollar, driven by improved economic sentiment in China amid ongoing global monetary policy adjustments.
Goldman Sachs US Dollar To Yuan Forecast: Stronger Policy Backing To Drive USD/CNY Lower - Exchange Rates Org UK
The desk anticipates a downward trajectory for USD/CNY, driven by stronger policy backing from Chinese authorities. Per the full note from Goldman Sachs, this shift is expected to be underpinned by a more supportive monetary stance, which could see the pair trading lower as the Chinese economy stabilizes. Current positioning suggests a growing consensus around this view, with several firms adjusting their forecasts accordingly. The absence of high-impact events in the near term allows this narrative to unfold without immediate market disruptions.
PBOC is expected to set the USD/CNY reference rate at 6.7946 – Reuters estimate
The desk sees the PBOC's upcoming USD/CNY reference rate setting as a pivotal moment for the yuan, particularly in light of Goldman Sachs' assertion that the currency is currently undervalued by about 20%. Per the full note [source], the anticipated fixing at 6.7946 will be closely monitored as it reflects the central bank's stance on currency stability amidst ongoing global economic pressures. With the PBOC's discretion in setting the midpoint based on various economic indicators, this fixing could signal their intent to manage depreciation risks or indicate a tolerance for a weaker yuan. The consensus among major firms suggests a range of targets that reflect varying views on the yuan's trajectory, with Goldman Sachs projecting a stronger CNY at 6.50 within a year, diverging from other estimates.
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