The Hong Kong dollar and short-dated money rates spiked higher on Tuesday on persistent demand for funds for a series of share offerings.
"Short-dated liquidity tightened on IPO-induced fund demand, with the one-month interbank rate rose to 4.40 percent in late trade," said a dealer at a local bank, adding that he noted some foreign banks sold a substantial amount of US dollars to buy the Hong Kong currency at around 7.7580t.
The domestic currency firmed to a one-week high of 7.7560/63 to the US dollar from Thursday's close of 7.7582/84.
HK benchmark Hang Seng index closed up 1.27pc at a fresh 5-1/2 year high on Tuesday, while China shares touched an 8-1/2 year peak after Beijing relaxed investment rules.
Short-dated market liquidity in Hong Kong, except for the overnight rate, has been tighter in recent sessions as players prepare funds for some initial public offerings (IPOs), which are expected to list on the Hong Kong bourse in coming weeks.
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