The Hong Kong dollar held onto the weaker side of its recent range against the US currency on Tuesday, triggering some worries about further fund outflows from the territory in the near term. The local currency weakened to 7.7999 before trading back to 7.7996/97 flat from Monday's close. "It has been edging towards its linked exchange rate to the greenback in recent sessions, I'm not ruling out there will be some outflows coming up," said a trader at a European bank.
In the past two weeks, there has been capital outflows due to arbitrage plays prompted by comparatively higher US interest rates, and as speculators unwound bets that China would soon revalue the yuan.
The aggregate balance - the sum of balances on clearing accounts maintained by banks with the Hong Kong Monetary Authority (HKMA) - stood at HK$9.322 billion on Tuesday, down from HK$15.84 billion on February 1.
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