The Hong Kong dollar held steady on Friday, while some interbank rates softened as market liquidity improved ahead of the listing of a jumbo IPO.
"The Hong Kong dollar moved in a narrow range throughout the day, with sentiment helped by a rebound in the stock market," one trader said. The currency, allowed to trade between 7.75 and 7.85 to the US dollar, was trading at 7.7562/63, little changed from Thursday's close of 7.7561/63.
Dealers said a recovery in the stock market eased worries about capital outflow.
The benchmark Hang Seng Index rose 1.26 percent on Friday, and the China Enterprises index of H-shares gained 0.72 percent.
In the interbank market, the overnight rate remained volatile but the two-week to three-month rates were easing. Traders expected interbank rates to soften further as more funds would flow back into the market when the Bank of China's US $9.7 billion IPO effect unwinds. The shares begin trading on June 1.
The share offering of Bank of China closed on Tuesday and attracted strong demand from retail investors. The issue had soaked up HK$291 billion (US $37 billion) in funds before allocations.