Yuan is undervalued by 25% on trade basis

Trade surplus: The headquarters of the PBoC. Fearful that Beijing may be dumping its overcapacity on other countries to the detriment of local industries, some are pushing back against the flood of Chinese goods. — Reuters

BEIJING: Goldman Sachs Group Inc says the yuan is 25% undervalued and will appreciate more than forward contracts are priced for 2026.

Calling the Chinese currency one of its “highest conviction” trades, the Wall Street bank said the yuan is undervalued according to models that project an optimal exchange rate needed to sustain the nation’s economic fundamentals, including a steady current-account balance and growth with stable prices.