The Hong Kong dollar held onto the weak side of its recent range against the US unit on Wednesday, with little to spur buying interest with HK interest rates still below their US equivalents.
The local currency struggled at 7.7999/7.80 per US dollar for most of the day versus 7.7998/99 in late Asian trade on Tuesday.
"There was keen buying interest for the US dollar in arbitrage trades, and the local currency hit its peg several times, but figures from the HK Monetary Authority (HKMA) did not indicate a funds outflow. They may do so later in the day," one trader from a European bank said.
Under HK's currency board system, the HKMA is committed to defending the pegged rate of HK$7.8 by buying Hong Kong dollars in exchange for US dollars.
The aggregate balance - the sum of balances on clearing accounts maintained by banks with the HKMA - was steady at HK$11.178 billion.
The weakening of the local currency led to a narrowing in HK dollar forward discounts.
Comments
Comments are closed.