The Hong Kong dollar fell to a one-week low on Thursday afternoon on import-related demand for US dollars, tracking losses in other regional currencies.
The currency was trading at 7.7532/33 to the US dollar at 0940 GMT, softer than Wednesday's close of 7.7527/28. It had weakened to 7.7535, at one point touching its lowest level since May 3.
Asian currencies weakened on Thursday, retreating from multi-year highs struck this week after a much anticipated US Treasury report stopped short of naming China as a currency manipulator.
A spokesman in the Chinese Foreign Ministry said on Thursday China would continue to improve its currency regime and provide for greater flexibility in the yuan, while keeping the exchange rate stable at a suitable and balanced level.
The Hong Kong dollar has been supported by a steady inflow of funds in recent months, speculation of a further yuan appreciation and ahead of upcoming initial public offerings.
One trader at a Chinese bank said some outright buying interest in the spot and forwards market in the afternoon had limited the local currency's advance.
He expected the Hong Kong dollar to move between 7.7510 and 7.7550 per US dollar in the near term.
The US Federal Reserve on Wednesday raised its key rate to 5.00 percent from 4.75 percent, its 16th interest rate rise since June 2004, as expected.
Hong Kong tends to follow US rate moves because the local currency is pegged to the US dollar, but an influx of money into Hong Kong in recent months has boosted liquidity and pushed down local interbank rates. That allowed local banks to keep interest rates unchanged on Thursday.
The overnight interbank rate was quoted at 2.75/3.00 percent, while the one-month rate eased to 4.28/4.33 percent late on Thursday from Wednesday's 4.34/4.38 percent.
Comments
Comments are closed.