The Hong Kong dollar weakened against the US dollar on Thursday with UK and US banks buying US dollars, traders said. China's move this week to raise bank reserve requirements continued to put pressure on the Hong Kong currency as tighter Chinese monetary policy could curb capital inflows to the territory from the mainland, analysts said.
The local currency was quoted at 7.7566/68 versus the US dollar, having earlier hit a session low of 7.7570. Analysts said the Hong Kong currency was also depressed by a rally this year in Asian currencies that are not pegged to the dollar, such as the Indonesian rupiah, which are benefiting from rising risk appetite as the global economy shows signs of improving. Traders expect the Hong Kong dollar to trade in a range between 7.7550 and 7.7585 in the next two weeks.