HONG KONG (Dow Jones)--The Hong Kong dollar fell slightly against the U.S. dollar Thursday in a quiet session, damped by weakness in local shares after the Federal Reserve signaled its asset-buying program will end this month as scheduled.
In late Asian trade, the U.S. dollar was at HK$7.7894, up from HK$7.7890 late Wednesday. The U.S. unit was fixed at HK$7.7895 earlier Thursday.
Traders said the greenback could stay strong against the local currency, amid weak market sentiment with the U.S.'s quantitative-easing program drawing to an end. They said they expect the U.S. dollar to reach HK$7.7940 in the near term, after consolidating around the HK$7.7890 level.
"Investors are still wary of possible fund outflows from the local market, so they tended to stay on the sidelines for the session," said a senior trader at a Chinese bank, adding trading volume was low with no clear momentum.
The benchmark Hang Seng Index ended down 0.5% at 21,749.22, tracking losses on Wall Street overnight.
Federal Reserve officials noted they were sticking with plans to end the purchase of US$600 million in U.S. Treasurys on June 30, after the Federal Open Market Committee's decision to leave its policy rate unchanged at zero to 0.25%.
The Hong Kong Monetary Authority followed in lockstep, keeping its base rate at 0.50%.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 213 points to the spot rate, compared with a 209-point discount late Wednesday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
