Dollar climbs as Evergrande uncertainty creeps in


NEW YORK, Sept. 24 (Reuters) – The dollar appreciated on Friday and set to post its third straight week of gains against a basket of major currencies, as uncertainty surrounding embattled Chinese real estate developer Evergrande helped the greenback to rebound after a sharp drop from the previous session.

China Evergrande Group (3333.HK) owes $ 305 billion and ran out of cash, missing a Thursday deadline to pay $ 83.5 million and leaving investors wondering if it will make the payment before expiration a grace period of 30 days. A business collapse could create systemic risks for China’s financial system. Read more

The safe-haven dollar on Thursday saw its biggest single-day percentage decline in about a month after Beijing injected new liquidity into the financial system and Evergrande announced it would pay interest on an onshore bond, further bolstering the feeling of risk.

The offshore Chinese yuan weakened against the greenback at 6.4641 per dollar.

The drop came a day after the greenback was lifted by the U.S. Federal Reserve’s announcement on Wednesday that it will likely start cutting monthly bond purchases as early as November and reported interest rate hikes could track sooner than expected as central bank pulls away. of its pandemic crisis policies. Read more

“We’re in one of those situations, and it doesn’t always happen, where the dollar is the beneficiary of multiple ideas,” said Joseph Trevisani, senior analyst at FXStreet.com.

“The US economy looks better than most of its competitors, fear persists about Evergrande and what’s going on in China’s rather opaque economy and political system, and the Fed finally seems ready.”

The dollar index rose 0.237%, with the euro down 0.2% to $ 1.1713.

Kansas City Fed President Esther George said the U.S. labor market has already passed the central bank’s test to reduce its monthly bond purchases, and the discussion should now be on how its holding massive bond yields could complicate the decision to raise rates.

Cleveland Fed Chairman Loretta Mester echoed the sentiment of a slowdown this year and said the central bank could start raising rates by the end of next year if the labor market continued to improve as expected. Read more

In remarks prepared during a listening session with a wide range of economic players, Fed Chairman Jerome Powell did not detail his own outlook for economic or monetary policy, which he described at the close of the two-day Fed meeting on Wednesday. Read more

The pound weakened a day after hawkish comments from the Bank of England on Thursday pushed the pound to its biggest one-day percentage gain since August 23. read more

The Japanese yen weakened 0.43% against the greenback to 110.77 per dollar, while the British pound last traded at $ 1.3666, down 0.36% on the day.

Cryptocurrencies collapsed after China’s most powerful regulators stepped up the country’s crackdown on digital assets, with a blanket ban on all crypto transactions and crypto mining. Read more

Bitcoin, the world’s largest cryptocurrency, last fell 5.89% to $ 42,256.47.

Smaller coins, which generally move in tandem with bitcoin, have also fallen. Ether last fell 8.08% to $ 2,899.10 while XRP last fell 7.2889413% to $ 0.93. Read more

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Currency bid prices at 3:21 p.m. (1921 GMT)

Reporting by Chuck Mikolajczak; Editing by Dan Grebler and Sonya Hepinstall

Our Standards: Thomson Reuters Trust Principles.

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