The Hong Kong dollar fell against the US dollar on Monday and the discount on local dollar forwards hit multi-month highs, triggered by weakness in the city's stock market. The domestic currency was trading at 7.8143/49 to the US dollar, having touched an intraday low of 7.8164, down from 7.8119/21 in late Asia trade on Friday.
One dealer at a European bank said the decline in the local currency was partly due to a soft dollar/yen, while the discount on Hong Kong dollar forwards narrowed as stocks plunged. The yen has rallied strongly in recent days against major currencies as investors rush to reverse bets against the yen on nervousness that the carry trade may be unravelling.
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