Yuan Gains On News That Evergrande Negotiated Sep 23 Yuan Coupon Payment

Spot USD/CNH took a nosedive after news wires reported that Evergrande's main unit has negotiated a coupon payment due Sep 23 on domestic notes with holders, while the PBOC provided a decent liquidity injection (net CNY90bn) as Chinese markets reopened after holidays. The rate changes hands -51 pips at CNH6.4765, off its session low of CNH6.4723.

• Re: today's liquidity injection, it is worth noting that the Evergrande developments have been unfolding ahead of the upcoming quarter-end/week-long Chinese holidays.
• BBG reported Tuesday that Evergrande missed interest payments to at least two bank creditors, adding that it was unclear if the banks wanted to declare Evergrande in default.
• The PBOC set their central USD/CNY mid-point at CNY6.4693, 8 pips above sell-side estimate, and left 1-Year and 5-Year LPR rates unchanged, in line with expectations. Both fixings were overshadowed by headlines related to the Evergrande saga.
• Separately, PBOC Gov Yi said that the central bank will ramp up supervision over the fintech sector and will protect data property rights and personal privacy.
• Bears need a pullback under the CNH6.4261-44 area, which limited losses this month, to regain poise. Bulls look for a rally above Sep 20 high of CNH6.4880, which would turn topside focus to Aug 20 high of CNH6.5102.