The Hong Kong dollar fluctuated in a narrow range on Wednesday with selling on the back of a rally in US dollar, but the downside was capped by demand for funds due to the tightness in short-dated money rates.
After shuffling between 7.7691 and 7.7715 per US dollar throughout the day, the local currency traded at 7.7710/13, slightly weaker than 7.7696/98 in late Asian trading on Tuesday.
The greenback was bolstered by an anticipated US interest rate increase from the Federal Reserve this week. It rose to its highest level in more than eight months against the yen and hit a 10-month high against the Swiss franc on Wednesday.
Most Asian currencies hit multi-month lows and were pressured by a falling Japanese yen.
The discount on one-year forwards narrowed to 270/250 pips from Tuesday's close of 290/275 pips.
"Short-term liquidity was very tight on increasing demand for funds before mid-year book closing, month-end as well as a long weekend holiday," another trader said.
Hong Kong financial markets will be closed on Friday for a public holiday and re-open on Monday.
Interbank rates moved higher as the market priced in an expected interest rate hike later this week.
The overnight rate was quoted at 2.75/3.25 percent late on Wednesday after hitting a high of 3.75 percent and compared with Tuesday's close at 3.20 percent.
The one-week rate rose to 3.62/3.68 percent from 3.45/3.50 percent.
Comments
Comments are closed.