The Hong Kong dollar was trapped in a narrow range on Tuesday in cautious trade as the stock market remained under selling pressure. The currency was trading at 7.7532/33 to the US dollar, little changed from Monday's close of 7.7531/33.
Hong Kong stocks slipped for the third straight session as investors fretted about fund flows and retreating commodity and crude prices dragged down oil shares. The benchmark Hang Seng index fell 0.62 percent and the China Enterprises index of H-shares dropped 1.47 percent.
One dealer at a European bank expected the Hong Kong dollar to move between 7.7520 and 7.7540 per US dollar in the near term.
The discount on Hong Kong dollar forwards widened amid a softening in short-dated money rates, dealers said. One trader reported some Chinese banks had lent out one-week and 10-day monies. That move had eased some pressure caused by initial public offerings (IPOs).
The overnight interbank rate softened to around 3.00 percent in late trade after hitting an intraday high of 3.80 percent, the trader added. The retail portion of an IPO by Tianjin Port Holdings, worth up to US $139 million, will be closed at noon on Wednesday and a trading debut is set for May 24. Market sources said the issue has received heavy demand and soaked up a large amount of funds before its allocation.
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