The Hong Kong dollar weakened on Monday, tracking other Asian currencies as euphoria over China's revaluation of the yuan last week gave way to caution. "Everyone is thinking about the likely timing of the next appreciation of the yuan but the market is much calmer than last week," a dealer said. "The highs Asian currencies reached last week after the revaluation will provide a very good cap in the near term."
The Hong Kong dollar was trading at 7.7748/52 to the US dollar late on Monday, down from 7.7739/40 in midmorning and 7.7703/06 late on Friday.
The Hong Kong unit is pegged at 7.75-7.85 to the US dollar.
It had reached 7.7643 on Thursday after China announced it would revalue its currency by 2.1 percent to 8.11 to the US dollar, after keeping it virtually unchanged at 8.28 since 1996.
In further reform of its currency regime, Beijing said it would break its peg to the US dollar and link the yuan to a basket of currencies.
The Hong Kong dollar is used as a proxy for the Chinese currency. However, optimism that Thursday's move was just the first step in a revaluation of the Chinese currency gave way on Monday to the reality that another yuan appreciation looks unlikely anytime soon.
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