The Hong Kong dollar inched higher on Friday, while long-dated interbank rates softened after the chairman of the US Federal Reserve hinted that an interest rate tightening campaign was nearing an end.
The domestic currency had firmed to 7.7539/40 to the US dollar from Thursday's close of 7.7547/49. One trader at a European bank said the Hong Kong dollar was among Asian currencies gaining after an unexpected decision by China's central bank to raise interest rates for the first time in 18 months.
The trader said there was some speculation that China's surprise interest rate rise might lead to a possible appreciation in the yuan in the near future.
Some dealers also expected the local currency to keep a firm tone on the prospect of fund inflows for upcoming initial public offerings (IPOs).
Bank of China, the country's number two lender, on Thursday won approval from the Hong Kong stock exchange to launch an IPO expected to be worth roughly US $8 billion, sources said.
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