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Rabobank: CNY is 20–30% undervalued, call for more flexible float

Rabobank also warned that China’s growing trade surplus with the EU could raise pressure for US-style higher tariffs in Europe.

Reported · Written up by our desk · Major Pairs

Rabobank analyst Michael Every said Chancellor Merz has urged dialogue with China on monetary and FX policy, arguing the Chinese yuan is 20% to 30% undervalued and that it should float more freely, according to FXStreet.

Every added that China is unlikely to accept a Plaza Accord-style agreement, and he pointed to China’s widening trade surplus with the EU as a factor that could push Europe toward higher, US-style tariff levels.

The note referenced recent trade data showing China imports up 36% year over year versus a 26.1% expectation, and exports up 27% versus 19%, with the implication that EU figures will need to be reviewed for a clearer read.

FXStreet also noted that FX markets were watching ongoing data and Fed-related commentary, with the US dollar pressured by softer inflation expectations and attention shifting to upcoming US PPI and Fed Chair Kevin Warsh testimony.

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