The Hong Kong dollar strengthened and discounts on forwards deepened on Friday in choppy trade amid fresh talk of 'hot money' flowing into the territory.
The local currency hit a two-week high of 7.7940 per US dollar in early afternoon business before pulling back to 7.7972/73 but still firmer than 7.7985/86 in late Asian trade on Thursday.
Meanwhile, the discount on one-year forwards was trading at 710/690 pips by late afternoon after hitting a five-and-a-half-month low of 750 pips, widening from Thursday's close of 630/610 pips.
Hong Kong dollar forwards have fallen sharply in recent sessions as some players close out long US dollar positions amid wobbles for the greenback against major rivals.

Copyright Reuters, 2004

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