HONG KONG (Dow Jones)--The Hong Kong dollar was lower against the U.S. dollar for the second consecutive session Wednesday as weakness in local stocks cooled demand for the currency.
In late Asian trade, the U.S. dollar was at HK$7.7971, up from HK$7.7932 late Tuesday. The U.S. unit was fixed at HK$7.7967 earlier Wednesday.
Traders said risk appetite remains weak as the market trains its focus on U.S. economic fundamentals despite the passage of the U.S. debt ceiling deal in the Senate on Tuesday. They said they expect the U.S. unit, a relative safe haven, to be well-supported and to trade between HK$7.7950 and HK$7.7990 Thursday.
"The foreign banks are the major buyers of the U.S. dollar/Hong Kong dollar pair. I've spotted a Swiss bank, a U.K. bank and a U.S. bank buying about US$100 million in total amid the fall in local stocks. Yet I don't see any major capital outflows, as investors prefer to park funds in the city amid the volatile overseas markets," said a senior trader at a local bank.
The blue-chip Hang Seng Index fell 1.9% to 21,993, tracking the weaker regional stocks.
"Still, I see a resistance near the HK$7.7980 level as some local banks might take profit there," the trader added.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 236 points to the spot rate, compared with a 221-point discount late Tuesday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
