The Hong Kong dollar regained some ground on Thursday, boosted by a rebound in the local stock market. The currency was trading at 7.8159/63 against the US dollar, having touched a high of 7.8146, firmer than 7.8168/70 in late Wednesday trade in Asia.
Hong Kong stocks rallied on Thursday, tracking a strong recovery in Wall Street. The blue chip Hang Seng Index gained 1.4 percent, while the China Enterprise index of H shares jumped 2.58 percent.
Some dealers said the upside of the local currency would be capped as carry trades were likely to re-emerge, given that short-term interbank rates remained soft. Arbitrage traders will take advantage of an interest rate differential with the United States by selling Hong Kong dollars for the US currency.
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