The Hong Kong dollar regained some ground on Thursday after a recent sell-off, but dealers said near-term direction would continue to be dictated by the stock market. The local currency had firmed to 7.7715 per US dollar, recovering from a two-and-a-half week low hit on Wednesday, before trading at 7.7719/20 versus 7.7734/35 in late Asia trade on Wednesday.
One dealer said there were a number of factors leading the local currency higher.
"A rebound in the local stock market and softer short-term interbank rates helped to ease fears of more fund outflows. General weakness for the US dollar also helped," the dealer said.
The blue chip Hang Seng Index rose 0.1 percent after a decline of about 2.3 percent over the previous two sessions.