The Hong Kong dollar rose to a three-month high on Monday, bolstered by an inflow of funds, tracking other Asian currencies higher as the US dollar tumbled after the Group of Seven industrial nations said China should let the yuan appreciate.
The local currency had firmed to 7.7534/36 per US dollar, the highest point since January 17, and compared with Friday's close of 7.7548/49. "It seems that there are some funds flowing into the city," one trader said. He said the money might be related to a transaction for a port sale or an inflow for initial public offerings (IPOs).
The US dollar fell to a three-month low against the yen and a seven-month low versus the euro on Monday. "The Hong Kong dollar from now to the end of May will continue to find support," the dealer said, adding that a number of IPOs were on the agenda and that would attract foreign investment.
Hong Kong's currency is allowed to trade between 7.75 and 7.85 per US dollar. Hong Kong dollar forwards' discount widened on Monday following a firmer local currency, dealers said.
The discount on three-month forwards was quoted at 108/103 pips, widening from 98/93 pips late on Friday. The discount on one-year forwards deepened to 465/455 pips from Friday's close of 445/425 pips.
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