The Hong Kong dollar edged up against the US dollar as some funds might have been flowing into the territory despite a drop in the local stock market and a generally firmer US dollar after the Federal Reserve raised the interest rate it charges banks for emergency loans.
"It was a surprise to see the local dollar firm against the US currency when the firm tone of the greenback remained," said a dealer at a local bank. "Some bargain hunters might have parked their funds in Hong Kong, preparing for the reopening of the mainland market next week after the holiday, aiding a firmer local dollar."
Dealers said the HKD may edge up toward 7.7650 to the US dollar if there were more funds flows into the territory after Europe opened. The HKD is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85. Dealers said the Fed's discount rate hike was seen having a limited impact on the market for the time being but could pressure the Hong Kong dollar in the long run due to possible interest rate hike in the US.