FOREX-Evergrande nerves weigh on offshore yuan, dollar soars on security offer

 (Updates prices, adds Wells Fargo forecast)
    * Evergrande worries hit offshore yuan
    * Dollar index near 1-month high on safety bid

    By Chuck Mikolajczak
    NEW YORK, Sept 20 (Reuters) - The offshore Chinese yuan weakened versus the greenback to its lowest
level in nearly a month on Monday, as worries about the repercussions from property developer Evergrande's
solvency issues spooked financial markets and lifted safe-haven currencies. 
    Market sentiment has been rattled by the potential contagion from Evergrande, which is trying to raise
funds to pay a host of lenders, suppliers and investors. A deadline for an $83.5 million interest payment on
one of its bonds is due on Thursday, and the company has $305 billion in liabilities.

    On Thursday, the yuan strengthened to its highest level in three months at 6.4226 per dollar before
starting to reverse as Evergrande's woes worsened. The move sharpened on Monday after warnings from Chinese
regulators that the company's insolvency could fuel broader risks in the country's financial system if not
    Analysts at Wells Fargo said on Monday they expect the dollar to reach 6.60 per yuan within the next
month. The offshore Chinese yuan last weakened versus the greenback at 6.4839 per dollar.
    "We are seeing a classic flight to safety in the dollar until we get some sense of clarity on whether or
not it is going to be an orderly or disorderly resolution to Evergrande," said Joe Manimbo, senior market
analyst at Western Union Business Solutions in Washington DC.  
    "We were likely to see a continuation of the decline we’ve seen in risk assets going into this week and
you throw in Evergrande and it has really unsettled the markets."
    The dollar and other safe-haven currencies such as the yen and Swiss franc gained with the risk-off
sentiment, which saw Wall Street's S&P 500 index on pace for its biggest one-day percentage drop 11 months. 
    The dollar index rose 0.025%, with the euro unchanged at $1.1725.
    The dollar has also been gaining ground on expectations the Federal Reserve will begin reducing its
monthly bond purchases this year, with the central bank's policy announcement due on Wednesday.
    Aside from the Fed, multiple central banks around the globe will hold policy meetings this week,
including those of Sweden, England, and Norway. 
    The Japanese yen strengthened 0.58% versus the greenback at 109.32 per dollar, while sterling was
last trading at $1.3656, down 0.63% on the day.    
    The Canadian dollar, also a commodity currency that correlates with risk sentiment, weakened to as low
as C$1.2895 per dollar, its lowest level in four weeks. It last fell 0.42% versus the greenback at C$1.28
per dollar.
    Polling for Monday's national election in Canada points to an advantage for incumbent Prime Minister
Justin Trudeau, but he is unlikely to gain a parliamentary majority.
    In cryptocurrencies, bitcoin last fell 7.76% to $43,577.67.
    Currency bid prices at 2:52PM (1852 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
 Dollar index                 93.2330        93.2230     +0.03%         3.614%        +93.4550    +93.1850
 Euro/Dollar                  $1.1727        $1.1726     +0.01%         -4.02%        +$1.1737    +$1.1700
 Dollar/Yen                   109.3350       109.9800    -0.58%         +5.82%        +110.0350   +109.3250
 Euro/Yen                     128.20         128.94      -0.57%         +1.01%        +129.0300   +128.1500
 Dollar/Swiss                 0.9276         0.9325      -0.51%         +4.85%        +0.9333     +0.9271
 Sterling/Dollar              $1.3655        $1.3727     -0.52%         -0.05%        +$1.3740    +$1.3640
 Dollar/Canadian              1.2820         1.2768      +0.42%         +0.68%        +1.2895     +1.2762
 Aussie/Dollar                $0.7243        $0.7263     -0.28%         -5.84%        +$0.7268    +$0.7221
 Euro/Swiss                   1.0878         1.0927      -0.45%         +0.66%        +1.0935     +1.0876
 Euro/Sterling                0.8587         0.8535      +0.61%         -3.92%        +0.8594     +0.8533
 NZ                           $0.7022        $0.7035     -0.26%         -2.28%        +$0.7042    +$0.7006
 Dollar/Norway                8.7395         8.7120      +0.28%         +1.74%        +8.7805     +8.7105
 Euro/Norway                  10.2500        10.2008     +0.48%         -2.07%        +10.2815    +10.1995
 Dollar/Sweden                8.6963         8.6787      +0.18%         +6.10%        +8.7459     +8.6644
 Euro/Sweden                  10.1986        10.1804     +0.18%         +1.21%        +10.2336    +10.1755

 (Reporting by Chuck Mikolajczak;
Editing by Bernadette Baum and Cynthia Osterman)

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