Goldman sees yuan reaching 6.40 as markets lag its outlook

Goldman Sachs Group Inc. expects the yuan to reach 6.40 per dollar within a year, arguing markets underestimate its scope to strengthen.

The bank's forecast compares with an exchange rate near 6.69 yuan to the dollar. Kamakshya Trivedi, its global head of foreign exchange, rates and emerging markets strategy research, says market pricing and other forecasters have not fully incorporated the appreciation he expects.

Goldman's valuation measures place the currency roughly 20%–25% below its estimated fair value, a discount Trivedi considers conservative. That assessment is distinct from the bank's forecast: an estimate of undervaluation does not establish how quickly the exchange rate will adjust or whether that gap will close.

Trade surplus supports Goldman's valuation argument

Trivedi points to China's external accounts as grounds for an even larger valuation gap than the bank's estimate suggests. Official figures put the country's trade surplus at $805.5 billion during January–August 2026, a measure of how much exports exceeded imports over that period.

The currency debate also carries diplomatic stakes. European trading partners have accused China of keeping its exchange rate artificially low to support exporters; Beijing rejects that characterization and attributes export performance to industrial competitiveness rather than currency policy.

Chinese authorities also argue that changing exchange rates cannot fix deeper imbalances across the world economy. That disagreement separates Goldman's investment thesis from a policy conclusion: expecting the yuan to appreciate does not establish that currency adjustment alone would resolve China's trade disputes.

Beijing's currency ambitions enter the calculation

Trivedi interprets the importance Beijing places on dependable trading relationships as a reason officials may accept further appreciation. He also links that potential tolerance to China's increasing emphasis on advanced manufacturing and technology, although this remains his assessment of policymakers' thinking rather than an announced exchange-rate commitment.

The strategist connects his forecast with Chinese President Xi Jinping's previously stated ambition for a powerful currency used internationally for commerce, investment and reserves. Trivedi argues that sustained appreciation would support that objective by improving the return proposition for investors holding Chinese assets.

The yuan has already reached its strongest dollar level in four years and gained more than 8% against the euro during 2026. Those moves provide context for Goldman's call: the bank is arguing for an extension of appreciation, not merely a recovery from a new low.

Policy tolerance sets the forecast's limits

Trivedi describes the expected path in measured terms: “Our view is very simple: we think it will be a gradual process, but it’s going to be sustained,” he said. His argument depends partly on Chinese authorities becoming more comfortable with a stronger, tightly managed currency.

If officials permit the adjustment Goldman anticipates, the scenario would support its currency forecast and, in Trivedi's assessment, Beijing's internationalization ambitions. For global investors, his stated mechanism is the additional appeal of Chinese assets when currency appreciation contributes to returns.

If that policy tolerance fails to develop, the valuation discount alone would not establish a timetable for gains. The unresolved issue is therefore not just what Goldman considers the yuan worth, but how far and how quickly Chinese authorities are prepared to let it rise.