The US dollar rose on Friday and posted its third straight week of gains against a basket of major currencies, as uncertainty over beleaguered property developer China Evergrande Group (恆大集團) helped the greenback bounce back from a sharp decline in the prior session.
The Chinese firm owes US$305 billion and has run short on cash, missing a Thursday deadline for paying US$83.5 million and leaving investors questioning whether it would make the payment before a 30-day grace period expires.
A collapse of the company could create systemic risks to China’s financial system.
THURSDAY DROP
The safe-haven US dollar had its biggest one-day percentage drop in about a month on Thursday, after Beijing injected new cash into the financial system and Evergrande announced that it would make interest payments on an onshore bond, boosting risk sentiment.
The offshore Chinese yuan weakened versus the greenback to yuan 6.4641 per dollar.
The decline came a day after the greenback was lifted by Wednesday’s announcement from the US Federal Reserve that it would likely begin to trim its monthly bond purchases as soon as November and flagged interest rate increases might follow suit sooner than expected as the central bank moves away from its COVID-19 crisis policies.
MULTIPLE FACTORS
“We are in one of the situations, and this doesn’t always happen, where the dollar is the beneficiary of multiple ideas,” FXStreet.com senior analyst Joseph Trevisani said.
“The US economy does look better than most of its competitors, there is lingering fear out there over Evergrande and what else is out there in the rather untransparent Chinese economy and political system, plus the Fed appears finally ready,” Trevisani said.
The US dollar index rose 0.237 percent, with the euro down 0.2 percent at US$1.1713.
NEW TAIWAN DOLLAR
The New Taiwan dollar rose against the US dollar, gaining NT$0.042 to close at NT$27.731, up a slight 0.02 percent from NT$27.736 a week earlier.
Sterling weakened a day after hawkish comments from the Bank of England on Thursday pushed the pound to its biggest one-day percentage gain since Aug. 23.
The Japanese yen weakened 0.43 percent to ￥110.77 versus the greenback, while Sterling declined 0.36 percent to US$1.3676.
Additional reporting by CNA, with staff writer
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