New data suggests China’s yuan could reportedly be extremely undervalued against the US dollar.
Brad Setser, a senior fellow at the Council on Foreign Relations, as well as Goldman Sachs analyst Teresa Alves, both predict the yuan is currently undervalued against the dollar, reports the Wall Street Journal.
While Setser predicted the yuan could be 30% undervalued, Alves said the figure could be between 20% and 30%, adding that a rise in the value of the yuan in 2026 is one of their “highest conviction” views.
Currently, one US dollar is equivalent to about seven yuan. However, Chinese officials believe the yuan could jump to four or five per dollar, according to the report.
Liu Shijin, a top economic advisor to the Chinese government, said in a November speech that the U.S. and U.K were once also manufacturing nations with “puny” currencies that eventually blossomed.
As stated by Shijin,
“Chinese consumers can use the same amount of renminbi to enjoy more high-quality, affordable international products, thereby truly realizing the goal of becoming a strong consumer nation.”
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