The Hong Kong dollar edged lower against the US dollar on Friday, while short-term interbank rates remained firm on IPO-related fund demand. The domestic currency fell as low as 7.8147 to the US dollar before recovering slightly to 7.8137/40, but was still weaker than 7.8130/32 in late Thursday trade in Asia.
One dealer at a European bank reported that there was strong paying interest for the US currency in the afternoon, but there was no clear reason for this. He said the USD/HKD spot rate could head towards 7.8180 if it breaks 7.8150 in the short term.
Another trader suspected the US dollar buying might have been related to some investors taking profits in the stock market after recent sharp gains. The Hong Kong stock market was volatile on Friday, with the blue chip Hang Seng Index closing 0.21 percent higher and the China Enterprise index of H shares rising 0.26 percent.
The Hong Kong dollar is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85. In the cash market, the two-week and one-month interbank rates hovered at 4.50 to 4.60 percent amid several equity initial public offerings.
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