HONG KONG (Dow Jones)--The Hong Kong dollar rose against the U.S. dollar Friday, supported by gains in the local stock market and increased risk appetite after Greece's prime minister dropped plans to hold a referendum on the country's aid package, likely preventing the bailout deal from collapsing.
In late Asian trade, the greenback was at HK$7.7669, down from HK$7.7703 late Thursday. The U.S. unit was fixed at HK$7.7673 earlier Friday.
Trade, however, was cautious as investors remained concerned over the latest developments in Greece and awaited the outcome of a confidence vote by the southern European country's parliament later in the global day, which would pave the way for a new coalition government and Prime Minister George Papandreou's exit.
Dealers tipped the greenback to move between HK$7.7640 and HK$7.7720 Monday.
"I expect the [U.S. dollar-Hong Kong dollar] pair to remain on a downward bias as the Greek government's decision to drop the controversial referendum should continue to help lift risk appetite, while continued tight liquidity in the local currency will limit the pair's rise," said a trader at a local bank.
At 0730 GMT, the blue-chip Hang Seng Index was up 3.4% at 19,901.17.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 210 points to the spot rate, compared with a 223-point discount late Thursday.
-By Susanna Tai, Dow Jones Newswires; 852-2832-2338; susanna.tai@dowjones.com
