Exact incorrectly handles optional object with union type

[defunctzombie]

When trying to use Exact with my function input, I am seeing the following error from typescript type checking:

Property 'union' is incompatible with index signature.
                      Type 'string' is not assignable to type 'never'.
                        Type 'string' is not assignable to type 'never'.(2345)

Here is the code which uses the Exact type with my func to validate the input object.

type ParamType = {
  outer?: {
    inner?: {
      union: "foo" | "bar";
    };
  };
};

type Input = {
  outer?: {
    inner?: {
      union: "foo" | "bar";
    };
  };
};

const input: Input = {
  outer: {
    inner: {
      union: "foo",
    },
  },
};

function func<InputT extends Exact<ParamType, InputT>>(_foo: InputT) {
  // no-op
}

func(input);

ParamType and the Input are both the same.

Playground Link

Is my expectation of what Exact should be doing here wrong?

[sindresorhus]

// @zorji