HONG KONG (Dow Jones)--The Hong Kong dollar rose Tuesday against the U.S. dollar as stronger manufacturing data in China improved risk sentiment to the benefit of Hong Kong's share market.
In late Asian trade, the U.S. dollar was at HK$7.7977, down from HK$7.7991 late Monday. The greenback was fixed at HK$7.7998 earlier Tuesday.
Currency dealers said quiet trade is likely to keep the pair range-bound in the near term, though it is likely to be biased downward if the U.S. Federal Reserve hints at stimulus policies to boost the U.S. economy. They expect the range to extend from HK$7.7970 to HK$7.8020.
"Though the Fed is unlikely to announce another round of quantitative easing, the market still expects (U.S. Federal Reserve Chairman) Ben Bernanke to offer further explanations of its ultra-low interest rates and other measures that favor the economy" in his speech at Jackson Hole, Wyoming, on Friday, said a senior dealer at local bank.
The benchmark Hang Seng Index ended up 2.0% at 19,875.53, as concerns of a global economic slowdown were temporarily eased by stronger manufacturing data in China.
The HSBC China Manufacturing Purchasing Managers Index, a gauge of nationwide manufacturing activity, rose to a two-month high of 49.8 in August from a final reading of 49.3 in July, HSBC Holdings PLC said Tuesday.
A reading below 50 indicates contraction from the previous month, while a reading above 50 indicates expansion.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 463 points to the spot rate, compared with a 460-point discount late Monday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
