The Hong Kong dollar was trapped in a narrow range on Thursday after hitting a one-week low in the previous day, while short-dated money rates softened in a market flush with liquidity.
The domestic currency was trading at 7.7603/05 to the US dollar, little changed from Wednesday's close of 7.7605/06. It had weakened to 7.7608 on Wednesday afternoon, the lowest point since March 22, after the Federal Reserve raised US interest rates and hinted more increases may be needed.
"Short-dated interbank rates opened softer and they are likely to keep an easier tone as more funds will return to the money market on Friday," said a dealer at a local bank,
Short-dated money rates have been softening in recent sessions as IPO-related fund demand dwindled.
The one-week interbank rate was quoted at 3.90/3.95 percent, softening from 4.08/4.13 percent late on Wednesday. The two-week rate fell 8 basis points to 4.05/4.10 percent from Wednesday's close at 4.13/4.18 percent.