The Hong Kong dollar weakened and discounts on forward rates narrowed on Monday as players covered short (US dollar) positions after the greenback found support ahead of this week's Federal Reserve policy meeting. Many players also scaled back their expectations for a near-term yuan revaluation after weekend comments from Chinese officials that Beijing would not rush to reform its pegged exchange rate regime. The local currency weakened to a four-month low of 7.7997/98 per US dollar from 7.7989/90 in late Asian trade on Friday.
Meanwhile, the discount on one-year forwards narrowed to 1,310/1,290 pips from Friday's close of 1,450/1,430 pips.