Goldman Expects Yuan Gains on Supportive Policy Signals

Key Moments

USD/CNY has slipped back below 6.95 as the yuan extends its recent appreciation.
Goldman Sachs has adopted a more constructive stance on the yuan, citing stronger policy backing and record FX inflows.
The bank has cut its USD/CNY forecasts to 6.90 in three months, 6.80 in six months and 6.70 over 12 months.

Yuan Extends Gains as Dollar Softens

The US Dollar has continued to lose ground against the Chinese Yuan, with the USD/CNY rate moving back below 6.95. The latest pullback comes as the dollar weakens more broadly and the yuan builds on its recent strength.

Goldman Sachs Turns More Positive on CNY

Goldman Sachs has shifted to a more optimistic view on the Chinese currency after the yuan’s advance outpaced the bank’s earlier projections in recent months. The firm now sees the rally as driven by more than just valuation support and export competitiveness.

According to the bank, the recent performance of the yuan increasingly reflects a change in official policy stance. Stronger daily reference rates and remarks from senior central bank officials are interpreted as signs that authorities are more comfortable with additional yuan appreciation.

Policy Signals and Capital Inflows Underpin Outlook

Goldman Sachs points to record foreign exchange inflows as well as ongoing resilience in Chinese exports as key factors bolstering the case for further currency gains, even after the recent rally.

These developments, combined with the perceived shift in tone from policymakers, are viewed as reinforcing the argument that the yuan can continue to appreciate against the dollar over the coming quarters.

Revised USD/CNY Forecast Path

In response to these dynamics, Goldman Sachs has lowered its projected path for USD/CNY. The bank’s new targets are shown below:

Time Horizon	USD/CNY Forecast
3 months	6.90
6 months	6.80
12 months	6.70

Valuation and Regional Currency Implications

Goldman Sachs emphasizes that the projections remain dependent on a stable backdrop for US-China trade relations. The bank notes that, even if USD/CNY follows this revised trajectory, the yuan would still be considered undervalued when viewed through longer-term valuation metrics.

The firm also suggests that continued yuan strength under this scenario would leave room for broader appreciation among other low-yielding currencies in Asia.