The Hong Kong dollar edged higher against a generally weak greenback on Friday amid persistent speculation of a revaluation of China's yuan currency in the near future. The local currency moved in a band between 7.7768 and 7.7817 to the US dollar throughout the day and traded at 7.7790/92 firmer than 7.7825/26 on Thursday.
The discount on one-year forwards widened to 1,410/1,390 pips from Thursday's close of 1,330/1,310 pips.
Dealers said US dollar sentiment remained bearish on concerns over the US budget and current account deficits.
"The market was thin ahead of the weekend ... meaning sizeable orders moved the market significantly," said a dealer from a Japanese bank.
Speculation that Beijing is moving closer to unshackling the yuan pegged at about 8.28 to the dollar, has gained momentum since China's first rate rise in nine years in October.
"Recent rhetoric from Chinese officials and state think-tanks on the yuan issue have stoked market expectations that China will make a change to its exchange rate regime sooner or later," said a dealer from a European bank.
Chinese media on Friday quoted a senior lawmaker as saying China should keep the yuan basically stable while reforming its currency system.
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