HONG KONG (Dow Jones)--The Hong Kong dollar was up against the U.S. dollar late Monday on continued tight liquidity, although intervention by the Japanese government to weaken the yen triggered some buying of the greenback that trimmed the Hong Kong dollar's earlier gains.
In late Asian trade, the U.S. dollar was at HK$7.7675 after hitting the intraday low of HK$7.7630, down from HK$7.7716 late Friday. The U.S. unit was fixed at HK$7.7668 earlier Monday.
Traders said they expect the Hong Kong unit to stay strong due to solid corporate demand from banks. They said they expect the U.S. dollar to trade between HK$7.7620 and HK$7.7700 Tuesday.
"I've spotted many investors parking funds in the city for investment opportunities. Both local and foreign banks are eager to sell the greenback for the local unit," said a senior trader at a local bank.
"The Japanese government's intervention in the yen caused some foreign banks to buy the greenback, trimming the gains of the local currency. Still, the rise in the U.S. dollar seems to be a one-off thing as the continued tight Hong Kong dollar liquidity will cap further rise in the U.S. unit," the senior trader added.
Earlier Monday, Japan's Finance Minister Jun Azumi confirmed that Tokyo started its latest intervention campaign at 0125 GMT, and dealers said the authorities were still actively buying dollars in afternoon trading. After hitting a session high at Y79.55, the greenback stayed at Y79.20 from 0240 GMT. It was at Y75.65 before the intervention.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 221 points to the spot rate, compared with a 228-point discount late Friday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
