HK Dollar Up Late On Profit Taking; Local Stocks A Key Driver

http://www.fxfxfx.com 2010-01-26 17:17:12

Latest Change USD/HKD Spot 7.7706 -0.0016 1-year USD/HKD Forward* -163 +1 Overnight Hibor 0.06% -20 bps 1-month Hibor 0.06% -20 bps 3-month Hibor 0.13% +1 bp 1-year Hibor 0.43% +1 bp 2-year EF Note 0.49% -2 bps 10-year EF Note 2.79% -2 bps
*mid-point of bid-offer spread
HONG KONG (Dow Jones)--The Hong Kong dollar rose against the U.S. dollar late Tuesday, as investors took profit in the U.S. unit after it rose for nine consecutive sessions.
However, potential monetary tightening in China and, as a result, weakening equities will remain a major concern for investors, traders said. Some investors resumed buying the U.S. dollar for safety Tuesday afternoon, erasing some the Hong Kong dollar's gains.
In late Asian trade, the U.S. dollar was at HK$7.7706, down from HK$7.7722 late Monday but up from an intraday low of HK$7.7656. The U.S. unit was fixed at HK$7.7677 earlier Tuesday.
'The drop in local stocks and lingering worries about China's tightening will continue to cause capital to flow out of Hong Kong and support the U.S. unit,' a trader at a U.K. bank said.
The trader said the Hong Kong stock market will remain 'the key driver' of the local currency in the near future, adding the U.S. dollar will likely trade between HK$7.7680 and HK$7.7750 the rest of this week.
Hong Kong's benchmark Hang Seng Index ended down 2.4% at 20,109.33, a four-and-a-half-month low.
'I believe the recent rise in the U.S. dollar (against the Hong Kong dollar) is set to persist. Flows from mainland China are moderating, and flows into Hong Kong and China assets are also likely to remain under short-term pressure as China's tightening process gathers steam,' a trader at another U.K. bank said.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 163 points to the spot rate, compared with a 164-point discount late Monday.

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Keywords：HK Dollar