China‘s yuan ‘may already be overvalued‘ and is set to move lower, Nomura says

The is probably already overvalued against the U.S. dollar and any efforts by President team to lock in that level as part of trade negotiations will likely backfire, according to Japanese financial firm Nomura.

The yuan has long been a sticking point for the U.S., which, despite years of long-term appreciation in the currency, accuses Beijing of keeping it artificially undervalued to boost exports. Washington has

Despite that request, Nomura said the American side appears to have it all wrong.

“We believe (the) yuan may already be overvalued against (the dollar), and China‘s latest round of monetary and credit easing may push (the yuan) further into overvalued territory,” Nomura said in a Monday note, referring to the country‘s in the world‘s second-largest economy.

In fact, attempts to stabilize the rate “could result in an increasingly overvalued yuan, slower export growth, elevated import growth and worsening current account deficits in China,” the Japanese firm said.

Nomura said it ultimately expects the yuan to move lower against the dollar “in the medium to long term,” though it did not suggest any levels or ranges.