The Hong Kong dollar gave up some recent gains on Tuesday, while discounts on forward rates narrowed as some players covered short positions in the wake of tightness in short-dated money rates.
After shuffling between 7.7685 and 7.7699 per US dollar throughout the day, the local currency traded at 7.7696/97, compared with 7.7685/87 in late Asia trade on Monday.
Some dealers said weaker local share prices had pressured the territory's currency. The dollar has been supported recently by a strong stock market rally which fuelled expectations that more foreign funds would flow into local equities.