The Hong Kong dollar clawed back slightly from overnight lows in offshore markets on Friday, but dealers said prices would remain volatile in thin pre-holiday trade. The local currency traded between 7.7559 and 7.7568 on Friday, not far from a 9-1/2 month low of 7.7575 in New York trade overnight.
The Hong Kong dollar was under pressure in recent sessions as players covered previously short positions on the US dollar before year-end book closings, investors took profit in the stock market, amid seasonal corporate demand for the US currency. One dealer said the USD/HKD spot rate could head towards 7.7620 if it broke 7.7580 in the near term. The Hong Kong dollar is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85. Local interbank offered rates were fixed higher for a third day amid concerns over capital outflow, dealers said.
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