The Hong Kong dollar edged lower on Tuesday, while longer-dated interbank rates and interest rate swaps rebounded after hawkish comments from Federal Reserve Chairman rekindled expectations for more interest rate rises.
The domestic currency, allowed to trade between 7.75 and 7.85 to the US dollar, was trading at 7.7590/92, softening from Monday's close of 7.7584/85.
Dealers attributed the decline to outright buying, interest rate arbitrage plays as well as the weakness on the local stock market.
Fed Chairman Ben Bernanke said on Monday the US central bank would remain vigilant in containing any increase in core inflation, comments that heightened market expectations of another US interest rate increase later this month.
Global stock markets fell after Bernanke's comments, with Hong Kong's benchmark Hang Seng index losing 0.27 percent on Tuesday.
"If the stock index keeps on a downtrend, there will be more fund outflows," one trader said.
Comments
Comments are closed.