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Goldman Sachs: Yuan 25% Undervalued

11 Dec, 2025

Summary

Goldman Sachs believes the yuan is significantly undervalued.
The bank projects the yuan will appreciate more than expected.
Undervaluation is based on models for economic fundamentals.

Goldman Sachs Group Inc. has declared the Chinese yuan to be 25% undervalued, positioning it as a high-conviction trade. The prominent investment bank's assessment stems from sophisticated models that evaluate the exchange rate necessary to sustain China's economic health.

These models consider key factors such as a stable current-account balance and consistent economic growth accompanied by stable price levels. Based on this comprehensive analysis, Goldman Sachs forecasts that the yuan's future appreciation will surpass what current forward contracts are indicating for the year 2026.

The bank's strong stance highlights a significant divergence from current market pricing, suggesting a substantial opportunity for investors anticipating a strengthening Chinese currency. This outlook implies potential shifts in currency markets and global trade dynamics.

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