The Hong Kong dollar recouped early losses on Friday as some corporate demand for US dollar was offset by steady investment funds flowing into the territory. The domestic currency was trading at 7.7821/23 against the US dollar at 0944 GMT, off a morning low of 7.7853, little changed from Thursday's close of 7.7821/22.
The Hong Kong dollar is linked to the US dollar and is allowed to trade between 7.75 and 7.85 to the US dollar. "There have been some fund flows into Asian equity markets," said a dealer at a European bank, adding that the Chinese yuan continued to rise also helped boost Asian currencies. Hong Kong's benchmark Hang Seng Index set a new record high before easing 0.31 percent on Friday as investors booked profits.
China's yuan hit 7.8870 against the US dollar on Friday, its highest level since Beijing revalued it by 2.1 percent last July, before trading at 7.8909 at 0915 GMT. Interbank rates were mixed with short-term rates firming up as players prepared for the refund of subscription money to unsuccessful subscribers to the Industrial & Commercial Bank of China's initial public offering. But mid- and longer-dated money rates remained soft on anticipation of improving liquidity following the listing of the world largest ever IPO.