Selling of USD to remain modest until there is further clarity on Evergrande’s position – MUFG
22.10.2021, 08:06

Selling of USD to remain modest until there is further clarity on Evergrande’s position – MUFG

The Chinese real-estate giant Evergrande made a payment of $83.5 million on bond interest. Evergrande has a number of payments still to make going forward and without full clarity on this payment and plans ahead, uncertainty is likely to continue, which should limit selling of USD, economists at MUFG Bank brief.

Hang Seng Property Index rebounds sharply easing USD demand

“The Hang Seng Properties Index has now rebounded close to 20% from the lows in September and we believe the general turn in sentiment is one factor behind the turn weaker for the US dollar in October.”

“But uncertainty remains high. There is some evidence that the real estate market in China has seen contagion. In addition, the impact on the real economy through a sharp slowdown in real estate activity could be a reality going forward unless the authorities can act to restore confidence.” 

“On 29th October another payment of $45 M is due with the 30-day grace period ending. So for now these upcoming dates will probably contain the rebound in risk related to the relief of default being avoided. So selling of the USD should remain modest until there is further clarity on Evergrande’s position and the position of other property companies in China.”

 

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