The Hong Kong dollar was little changed while discounts on forwards widened on Tuesday on an easing of political tension in Taiwan and a rebound in local stocks.
The local unit was trading at 7.7961/63 to the US dollar after shuffling between 7.7958 and 7.7965 throughout the day, little changed from 7.7957/58 in late Asia trade on Monday.
"It looks likely to be consolidating after a recent sharp move," one dealer said.
The local currency had weakened last week on political uncertainty in Taiwan and the weakness in local stocks. The Hong Kong dollar hit a six-month low of 7.7980 last Thursday.
Taiwan President Chen Shui-bian submitted on Tuesday a letter of consent to a recount of the presidential election, a day after his opponent filed a lawsuit in a bid to nullify Chen's narrow victory.