HONG KONG (Dow Jones)--The Hong Kong dollar was steady late Tuesday, erasing most of its early losses against the U.S. dollar due to solid corporate demand for the local currency.
In late Asian trade, the U.S. dollar was at HK$7.7679, slightly up from HK$7.7675 late Monday. The U.S. unit hit HK$7.7692 earlier Tuesday and was fixed at HK$7.7677.
Traders said transactions remain thin in the recent sessions as investors are staying on the sidelines ahead of the meeting of the Group of 20 industrialized and developing nations later in the week.
Investors are looking for G-20 leaders' plans to stabilize and stimulate global economic growth in the meeting that is due to kick off in Cannes Thursday.
"Yet, the strong demand for the Hong Kong dollar domestically remains the major theme in the medium term, lending support to the local currency," said a trader at a Chinese bank. He expected the U.S. dollar to trade between HK$7.7650 and HK$7.7700 in the near term.
The loan-to-deposit ratio for local banks increased to 87% by the end of September, underscoring the tighter liquidity the lenders are facing in terms of local funding, according to the Hong Kong Monetary Authority, thanks to solid demand for loans from Chinese companies.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 213 points to the spot rate, compared with a 221-point discount late Monday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
