HONG KONG (Dow Jones)--The Hong Kong dollar slipped against the U.S. dollar amid the fall in local equities after Standard & Poor's took the unprecedented step of downgrading its previously perfect rating of U.S. sovereign debt on Friday.
In late Asian trade, the U.S. dollar was at HK$7.8055, up from HK$7.8043 late Friday. The U.S. unit was fixed at HK$7.8059 earlier Monday.
Traders said they believe the U.S. dollar to be well-supported on risk aversion amid the uncertain global economic outlook, and expect it to trade between HK$7.8040 and HK$7.8090 Tuesday.
A senior trader at a local bank said he spotted a Swiss bank and a German bank buying the U.S. dollar amid the decline in local equities. But he also said he saw a major U.K. bank "buying the local currency on corporate demand", which trimmed the pair's gains.
The blue-chip Hang Seng Index closed 2.2% down at 20,490.57 due to concerns about the health of the U.S. economy. Standard & Poor's cut the credit rating of U.S. debt by one notch to AA+ from AAA late Friday in the U.S.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 225 points to the spot rate, compared with a 221-point discount late Friday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
