The Hong Kong dollar maintained a firm foothold against the US dollar on Monday, and most interbank rates edged higher on IPO-related demand for funds and expectation of an interest rate rise later this week.
The local currency firmed to 7.7521/23 per US dollar from 7.7531/32 in Friday's late Asian trade. One dealer from a local bank said there had been some US dollar selling in exchange for Hong Kong dollars recently, and he expected the spot rate could test the upper limit 7.75 set by the Hong Kong Monetary Authority in the near term.
The monetary authority adopted a two-way convertibility undertaking in May. The Hong Kong dollar is allowed to trade in a band between 7.75 and 7.85 per to the US dollar. If it reaches 7.75, the central bank would have to buy US dollars for Hong Kong dollars to maintain the peg.
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