Goldman: Yuan Looks 20% Undervalued, Strength Could Spill Over Into FX and Crypto

Goldman Sachs is telling clients the Chinese yuan looks materially undervalued and could gain ground over the next year, a shift that may reverberate beyond foreign-exchange markets and into payments and crypto. In a client note, the bank said the yuan is at least 20% undervalued versus the U.S. dollar. A stronger currency would be a "natural equilibrium" outcome, Goldman argues, given China's export performance. Analysts led by Kamakshya Trivedi described the case for appreciation as "more fundamental and longer-lasting," citing China's rising export competitiveness and an external surplus nearing unprecedented levels as a share of global GDP. The yuan traded around 6.80 per dollar on Friday. Goldman's forecasts call for 6.70 in six months and 6.50 within a year, which would put the currency near its strongest level against the dollar since early 2023. Goldman said broader use of the yuan for payment settlement across Asia and the Global South adds support. Policy and trade mechanics also bolster the outlook: the People's Bank of China has been raising exporter conversion ratios, a move the bank says makes a "gradual but sustained" appreciation the most likely base case. With the DXY dollar index weakening since 2025 and struggling to hold above 100, Goldman sees a more favorable backdrop for yuan upside. For crypto markets, a firmer and more widely used yuan could lift demand for RMB-linked payment rails and stablecoins, and in some corridors redirect cross-border settlement flows away from the dollar. Traders and crypto firms operating across Asia and the Global South may want to monitor yuan moves closely. Goldman's bottom line: the yuan is structurally undervalued with clear upside over the next year, a narrative that matters not only to FX desks but also to payments and crypto players tracking global settlement shifts.