The Hong Kong dollar regained some ground on Monday, consolidating after it hit a near three-month low against the US dollar last week. The local currency rose 0.02 percent to 7.7558 against the US dollar from late Friday trade in Asia. One dealer said the market seemed to have stabilised and demand for the US currency had dwindled.
Another dealer at a local bank said there had been some profit taking after the USD/HKD spot rate hit a high level last week. He expected the Hong Kong dollar to move in a narrow range of 7.7540 and 7.7570 in the next few days. The Hong Kong dollar weakened last week and hit a near three-month low of 7.7622 against the US dollar on Friday morning, partly due to investors' repatriation of funds after the selling of local stocks. The local currency is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85 to the US dollar.
Local interbank rates extended their fall on Monday amid abundant liquidity in the banking system and following the easing of US dollar rates, dealers aid. The one-month Hibor was fixed at 0.14929 percent on Monday morning, softer than 0.15071 percent on Friday. It was quoted at 0.06/0.12 percent in late afternoon on Monday. The three-month Hibor fell 3.8 basis points to 0.80357 percent.
Two dealers said the long-dated rates were likely to fall further after a grim US jobs report stoked worries about a deepening global recession and on expectations that the Federal Reserve will keep interest rates near zero for a long time.
Data on Friday showed US employers cut 524,000 jobs in December, driving the jobless rate to a 16-year high above 7 percent. Hong Kong dollar forwards were trapped in a tight range with thin activity, one dealer said, adding that attention focused on the funds flow amid a sluggish stock market.