HONG KONG (Dow Jones)--The Hong Kong dollar fell against the U.S. dollar Monday, in line with the general weakness of Asian currencies, as mounting concerns over European sovereign debt prompted investors to shift funds to the safe-haven greenback.
In late Asian trade, the U.S. dollar was at HK$7.7936, up from HK$7.7882 late Friday. The U.S. dollar was fixed at HK$7.7956 earlier Monday.
Traders expect the pair to be rangebound near term, as investors stay on the sidelines ahead of the Federal Reserve meeting Tuesday and Wednesday. They predict the U.S. unit will trade between HK$7.7930 and HK$7.7970 in coming sessions.
The Hong Kong dollar's fall was amplified by thin volumes, with Japan markets closed for a holiday, a trader at a U.K. bank noted.
Weakness in domestic stocks also weighed on the local unit. The benchmark Hang Seng Index ended down 2.8% at 18,917.95, after European Union finance ministers meeting in Wroclaw, Poland, failed to produce an agreement over the weekend on how to resolve the continent's intensifying debt woes.
Investors are hopeful Fed officials will come up with steps later this week to boost the ailing U.S. economy, such as altering the composition of its portfolio to hold more long-term debt.
The one-year U.S. dollar/Hong Kong dollar forwards contract was quoted at a discount of 390 points to the spot rate, compared with a 388-point discount late Friday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
