The Hong Kong dollar held within a narrow range against the US dollar on Friday, while interbank rates nudged lower after further fund injections by the Hong Kong Monetary Authority (HKMA) during New York trading hours to defend the currency peg and amid a fall in US dollar rates. The local currency traded between 7.7500 and 7.7504 on Friday, ending barely changed from late Thursday trade in Asia.
One dealer at a local bank said there was some buying interest for US dollars from Chinese banks, and he expected the spot rate to move in a range of 7.7500 and 7.7505 next week with eyes on the stock market and fund flows. Data on Thursday showed that US employers cut 467,000 jobs in June, far more than expected, while the unemployment rate rose to 9.5 percent.
The Hong Kong currency is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85. Under the currency peg, the HKMA is usually obliged to intervene when the Hong Kong dollar hits 7.75 or 7.85, to keep the band intact. Local interbank rates fell on Friday because of abundant liquidity in the banking system, and taking their cue from a fall in US dollar rates overnight, dealers said.
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