The Hong Kong dollar weakened on Tuesday, weighed down by a decline in the city's stock market and some arbitrage trades. The domestic currency fell as low as 7.8135 against the US dollar before trading back to 7.8121/24, down from 7.8091/93 in late Asia trade on Monday.
One dealer at a local bank reported that the USD/HKD spot rate and Hong Kong dollar forwards were well bid amid some outright purchases. "We heard a big fund house was aggressively bidding up one-, two-, three- and 12-month forwards in recent sessions," the dealer said.
The discount on one-year Hong Kong dollar forwards narrowed to 685/675 pips from Monday's close of 710/700 pips. Some traders said sentiment was also hurt by a falling domestic stock market, which had raised concerns about capital outflow.
The benchmark Hang Seng Index was down 1.76 percent on Tuesday after the Shanghai Composite Index dived nearly 9 percent - its biggest fall in a decade - amid worries of further tightening measures ahead of a parliament session which begins next week.
Comments
Comments are closed.