HONG KONG (Dow Jones)--The Hong Kong dollar was higher against the U.S. dollar late Tuesday with risk appetite improving amid more stable global equity markets and after China said it would unveil new measures to support the city's economy.
In late Asian trade, the U.S. dollar was at HK$7.7931, down from HK$7.7954 late Asian trade Monday. The U.S. unit was fixed at HK$7.7900 earlier Tuesday.
Traders expect the Hong Kong dollar to gradually strengthen with better investor sentiment and possible fund inflows to Asia after the volatility seen last week. They expect the U.S. dollar will trade between HK$7.7880 and HK$7.7940 in the near term.
"The market is eyeing whether funds that previously shifted to the safe-haven greenback will flow back into the Hong Kong dollar," a trader at a Chinese bank said.
Chinese Vice Premier Li Keqiang started a three-day visit to Hong Kong Tuesday and said he would announce fresh measures to back the city's economy.
"I have brought with me new measures...to further support Hong Kong's development...and to deepen economic and trade cooperation between mainland China and Hong Kong," he told reporters.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 370 points to the spot rate, compared with a 335-point discount late Monday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
