How Far Can China’s Yuan Rise? What Goldman’s Models Show

What Happened

What Could a Stronger Yuan Pay Investors?

Trivedi says gradual appreciation makes returns on Chinese assets more attractive. Foreign investors gain on the currency when the yuan they hold buys more dollars.

Market Context

Goldman Sachs expects China’s yuan to strengthen to 6.40 per dollar within a year, from around 6.69 now. Its top currency strategist says forward markets have not caught up to that view.

Kamakshya Trivedi is Goldman’s global head of FX, rates and emerging markets strategy research. He puts the yuan’s undervaluation at 20% to 25% and calls that estimate conservative.

“At every stage as we’ve shifted the forecast stronger, I think I’ve been surprised by the extent to which consensus and forward markets still haven’t caught up to that,” Trivedi said.

Trivedi links a stronger yuan to Beijing’s goal of building a global reserve currency. Hong Kong supports that push with a yuan-denominated gold market. The city plans to grow its Shanghai-linked vault from 150 tonnes to over 2,000 tonnes within three years.

Charles Chang of S&P Global Ratings said gold gives yuan holders another way to use the currency. However, analysts do not expect the dollar’s dominance in global transactions to change soon.

Trivedi expects the yuan’s climb to be gradual but sustained. The next test is whether forward markets move closer to Goldman’s 6.40 target.

Why It Matters

Goldman has repeatedly moved its forecast stronger. In May, the bank lifted its one-year target to 6.50 per dollar. The new 6.40 call goes further.

Bloomberg ranks it among the few currencies positioned to keep rising while the dollar rebounds on geopolitics and inflation. In March, analysts expected Beijing to tolerate gradual appreciation toward 6.70. The yuan now trades around that level.

Trivedi says policymakers may be growing more comfortable with further gains, partly because stable trade ties matter to them.

Details

Why Does Goldman Keep Raising Its Yuan Call?

Trivedi tied the call to China’s trade surplus, which reached $805.5 billion in the first eight months of 2026. The yuan already sits at a four-year high against the dollar.

The dollar now buys 6.6922 yuan, down 4.30% since the start of 2026. The yuan has also gained more than 8% against the euro this year.

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“Modest, gradual but sustained appreciation I think serves that purpose of internationalization as well…It makes the return picture in Chinese assets a bit more attractive,” the executive added.

For example, $10,000 converted at 6.69 buys 66,900 yuan. At Goldman’s 6.40 target, those yuan would be worth about $10,450, a gain of roughly 4.5%.

Goldman’s fair-value models also point to a possible move toward 6 per dollar, last seen in early 2014. At 6.00, the same position would gain about 11.5%, assuming its yuan value stays flat.

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