The Hong Kong dollar hit a 10-month lows against the US dollar on Wednesday, pressured by interest-rate arbitrage trades and a fall in most Asian currencies after North Korea had launched missiles raised concerns of geopolitical risks.
The domestic currency weakened to 7.7715 to the US dollar, at one point touching the lowest level since early September, before pulling back to 7.7710/12. On Tuesday, it ended local trading at 7.7675/77.
"The market has been dominated by arbitrage plays," one trader said, adding that some outright buying interest in the spot and six-month Hong Kong dollar forwards.