The Hong Kong dollar hit a 5-1/2 month low against the US dollar late on Thursday as local equities continued to weaken and amid assurances from China that it would keep its yuan exchange rate stable.
Hong Kong shares ended lower for the third day in a row, tracking losses on Wall Street.
The benchmark Hang Seng Index closed 1.44 percent down at 13,024.06.
Dealers said a recent correction for the local stock market had stoked fears that investment funds would flow out of the territory for more lucrative destinations, pressuring the HK dollar.
Meanwhile, China officials have continued to emphasise that there will be no imminent change to the country's yuan policy. China's central bank said on Thursday it would keep the yuan exchange rate "stable" at a "reasonable level".
"There has been buying interest for the US dollar against the local currency in recent days as some players adjusted positions on fading hopes for a near term yuan revaluation," one trader said.
The Hong Kong dollar slipped to 7.7950 at 0920 GMT, the lowest level since late September, from 7.7925/26 on Wednesday in late Asian trade. Some dealers said they expected profit taking to emerge at the HK $7.7950 level.
"It (the HKD) is unlikely to make a quick return to its HK $7.80 peg with the USD given local short-term rates remain low at near zero percent," another dealer said.
Discounts on Hong Kong dollar forwards tightened, tracking the direction of the local currency against the US unit and the movement in yuan non-deliverable forwards, dealers said.
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