The Hong Kong dollar was modestly higher against the US dollar on Wednesday after moving in a narrow range, while interbank rates fell across the board amid abundant liquidity. The local currency hit a session high of 7.7535 against the US dollar, slightly firmer than late Tuesday trade in Asia.
One dealer reported that there was some selling interest in the greenback from US names, but there appeared to be no clear reasons. Another dealer said the market spent the day within a 10 tick range with little direction, and he had not seen big flows even after a rally in the stock market. He expected the USD/HKD spot rate to stay between 7.7530 and 7.7560 in the next two days.
Hong Kong's Hang Seng Index closed 2.25 percent higher on Wednesday, its first gain in three days, as metal and shipping stocks surged on signs China's investment-centred stimulus was helping soften the impact of the global recession. The Hong Kong currency is pegged at 7.8 to the US dollar but can trade between 7.75 and 7.85. Local interbank rates dropped on Wednesday, despite the US dollar Libors keeping a firm tone overnight.