The Hong Kong dollar edged lower on Thursday, but the discount on local dollar forwards widened amid some selling pressure in late afternoon trade. The domestic currency was trading at 7.7681/83 to the US dollar, softening from the previous day's close at 7.7672/73.
Dealers attributed the softness in the local currency to month-end corporate demand for the US dollar as well as some interest-rate arbitrage activities on the back of softer short-dated interbank rates.
The volatile overnight interbank rate was quoted at 3.50/3.60 percent late on Thursday after hitting a session high of 3.80 percent. It closed at 3.70/3.75 percent on Wednesday. Other interbank rates were trapped in narrow ranges through the day. The one-month rate was at 4.20/4.25 percent, barely changed from Wednesday's close at 4.21/4.26 percent. The one-year rate was steady at 5.06/5.11 percent. Hong Kong dollar forwards moved in a tight band for most of the day until some selling emerged in the late afternoon, said a dealer at a European bank.
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