Discounts on Hong Kong dollar forwards widened sharply on Monday amid a renewed bout of Chinese yuan revaluation speculation, dealers said. "The fall in forwards may be due to G7 comments. The comments will affect people's expectations of a revaluation in China's yuan," said a dealer. The HK dollar has been used as a proxy for the Chinese currency as the two economies become increasingly integrated. The discount on one-year forwards widened to 650/630 pips from Friday's close of 535/520 pips. The local currency weakened to 7.7991/92 per US $versus 7.7986/87 in trading on Friday.
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