Goldman Sachs Group Inc.’s Kamakshya Trivedi says the Chinese yuan is among the most underpriced currencies in the $9.5 trillion-a-day foreign exchange market, estimating it is undervalued by 20% to 25%. The bank forecasts the yuan strengthening to 6.40 per dollar within a year from around 6.69, with fair-value metrics pointing to a six handle as a future possibility. Trivedi attributes this to China’s swelling trade surplus, which stood at $805.5 billion for the first eight months of the year, and growing comfort among Chinese policymakers with gradual appreciation.
The yuan has already appreciated more than 8% against the euro this year and is one of the few currencies positioned for sustained appreciation amid a rebounding dollar. Beijing has rejected claims of currency manipulation, arguing its export strength stems from rising industrial competitiveness. Trivedi notes that modest, gradual appreciation aligns with Beijing’s goal of boosting the yuan’s global role as a reserve currency, making Chinese assets more attractive.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing