The Hong Kong dollar was trapped in a narrow range against the US dollar on Monday in cautious trade amid persistent weakness in equity markets. Hong Kong stocks slid for a third straight session, with the benchmark Hang Seng Index dropping 0.21 percent to five-month lows at the midday break on Monday on mounting concerns that the euro zone's debt problems will hamper the global economic recovery.
The China Enterprise Index of top locally listed mainland companies had fallen 0.27 percent. Dealers said a recent sell-off in the domestic stock market had weighed on sentiment, sparking fears of capital outflows from the city. One trader at a local bank said the US unemployment rate falling to 9.7 percent in January could lead to some investors trickling back their funds to the United States.
He forecast the USD/HKD spot rate would trade between 7.7680 and 7.7760 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 rates and Hong Kong dollar forwards were steady in quiet trade, dealers said. Three-month Hibor was fixed at 0.13 percent, unchanged for 10 straight days.
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