Hong Kong Dollar Foreign Exchange

 

HK dollar foreign exchange rate rises against US dollar as Asian stock markets close higher

Published on January 18, 2012 by   ·   No Comments

The HK dollar’s foreign exchange rate rose against the US dollar on Tuesday buoyed by gains in Asian stock markets and stronger than expected China economic growth figures.

In late Asian trade, the U.S. dollar was at HK$7.7662, down from HK$7.7689 late Monday. The U.S. unit was fixed at HK$7.7677 earlier Tuesday.

Traders said the improving risk sentiment may be short-lived as ongoing euro-zone debt problems will likely limit the rise of the Hong Kong unit. They expect the US dollar to trade between HK$7.7650 and HK$7.7700 Wednesday.

“The strong rise in Hong Kong stocks drew demand for the local currency,” said a senior trader at a local bank.

The blue-chip Hang Seng Index rose 3.24% to 19,627.75, spurred by China’s higher-than-expected fourth-quarter gross domestic growth of 8.9%.

“The better-than-expected China GDP growth boosted risk sentiment. The [Hong Kong Monetary Authority's] latest move to relax its restriction on offshore yuan business in Hong Kong also triggered foreign fund inflows,” said the senior trader.

The HKMA said Tuesday it has loosened restrictions on banks’ offshore yuan business, including raising the cap on lenders’ net open positions in China’s currency to 20% of their assets or liabilities denominated in the currency, from 10% previously.

The one-year US dollar to Hong Kong dollar forward contract was quoted at a discount of 17 points to the spot rate, compared with a 13 point discount late Monday.

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