HONG KONG (Dow Jones)--The Hong Kong dollar rose against the U.S. dollar Friday due to continued demand for the local currency despite weaker domestic equities.
In late Asian trade, the U.S. dollar was at HK$7.7784, down from HK$7.7794 late Thursday. The U.S. unit was fixed at HK$7.7777 earlier Friday.
Traders said they expect the greenback to remain under pressure as improved risk sentiment is prompting investors to sell the safe-haven U.S. unit. They said the U.S. dollar will likely trade between HK$7.7750 and HK$7.7800 in the near term.
The Hong Kong dollar was also boosted by demand from banks and companies, who held on to the local unit because of tight liquidity even as domestic stocks slipped, traders said.
The blue-chip Hang Seng Index fell 1.36% to 18,501.59 on profit-taking after a six-session, 15.4% winning streak.
A trader at a Chinese bank said he had spotted some local and Chinese firms selling the greenback for the local currency because of banks' shrinking Hong Kong dollar deposits.
"The buying side (of the U.S. dollar) is rather quiet these days," the trader added.
Data from the Hong Kong Monetary Authority released Sept. 30 showed deposits of Hong Kong dollars in local banks declined 2% in August from a month earlier, while deposits of offshore yuan grew 6.4%, indicating that depositors are converting their Hong Kong dollars into yuan as they expect the Chinese currency to appreciate.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 302 points to the spot rate, compared with a 311-point discount late Thursday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
