Goldman Sachs: Yuan Could Be 20-30% Undervalued Against Dollar

Goldman Sachs has issued a bullish call on the Chinese yuan, with valuation models suggesting the currency is 20% to 30% undervalued against the US dollar. The investment bank has made the yuan one of its top trade ideas heading into 2026.

Goldman’s updated USD/CNY forecasts target 6.80 in three months, 6.70 in six months, and 6.50 over twelve months. The expected appreciation is driven by China’s strong export performance and structural economic advantages, including a widening current account surplus.

The bank’s GSDEER model puts the yuan’s fair value at roughly 5.00 USD/CNY, implying a 30% gap. A second model, GSFEER, focuses on current account dynamics and estimates undervaluation around 12%.

Teresa Alves at Goldman Sachs leads the analysis, flagging a strong bullish case. Risks include potential US-China trade escalation or Beijing deliberately weakening the yuan to offset tariffs.

Over the long term, the GSDEER model projects the yuan will remain approximately 19% undervalued by 2035, reflecting Beijing’s careful management of the exchange rate and capital controls.