HONG KONG (Dow Jones)--The Hong Kong dollar rose against the U.S. dollar late Wednesday thanks to strength in the local stock market, but trading volume was tepid amid continued concern over euro-zone sovereign debt issues.
In late Asian trade, the U.S. dollar was at HK$7.7924, down from HK$7.7931 late Tuesday. The U.S. unit was fixed at HK$7.7920 earlier Wednesday.
Traders said the local stock market received some support from Chinese Vice Premier Li Keqiang's announcement of new measures to enhance the city's international competitiveness through closer ties with mainland China. They said they expect the U.S. dollar to trade at HK$7.7900 to HK$7.7950 in the near term.
Among the measures, Li announced plans to allow exchange-traded funds with Hong Kong-listed stocks as constituents to be sold in mainland China, opening the door for mainland investors to take part in Hong Kong's equities market for the very first time.
Also on Wednesday, People's Bank of China Gov. Zhou Xiaochuan said China will allow domestic entities to issue more yuan bonds in Hong Kong. He said domestic entities will be allowed to raise CNY50 billion (US$7.8 billion) in Hong Kong by selling yuan-denominated bonds this year.
The benchmark Hang Seng Index ended up 0.4% at 20,289.03.
"Trading sentiment remains cautious amid continued concern over euro-zone debt issues," said a trader at a local bank, adding that volume was tepid.
Traders also said the pair attracted bargain-hunting interest. "There is some buying interest around HKD7.7900 as traders tend to buy low," said a trader at a Singapore bank.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 333 points to the spot rate, compared with a 370-point discount late Tuesday.
-By Susanna Tai, Dow Jones Newswires; 852-2832-2338; susanna.tai@dowjones.com
