The Hong Kong dollar barely moved on Wednesday although it was supported by solid fund inflows as the stock market hit a record high and funds accumulated for share offerings. The Hong Kong currency was trading at 7.7866/67 to the US dollar compared with 7.7866/68 in mid-morning and 7.7867/68 late on Tuesday.
The HK dollar is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85. Traders were cautious as trade between the US dollar and major currencies thinned ahead of holidays in the United States and Japan on Thursday. However, Hong Kong's currency was underpinned by the stock market's surge to a record high, on robust volume of HK$53.5 billion (US $6.9 billion), and by demand for funds ahead of IPOs.
"Liquidity is strong. A lot of investors, including banks, are keeping money for IPOs and that's pushing down short-term money rates," a trader said. The one-month interbank rate was quoted at 3.91/3.99 percent in late trade. However, the trader said he expected it to rise above 4 percent next week as demand for fund flows eased.