HONG KONG (Dow Jones)--The Hong Kong dollar fell against the U.S. dollar Tuesday amid local stock market weakness and strong U.S. dollar demand following Bank of America's sale of shares in China Construction Bank.
In late Asian trade, the U.S. dollar was at HK$7.7812, up from HK$7.7794 late Monday. The U.S. unit was fixed at HK$7.7814 earlier Tuesday.
A senior trader at a local bank said there was strong demand for the U.S. dollar Tuesday following Bank of America's (BAC) sale of a 4% stake in China Construction Bank. The sale was made through a private transaction at a 10.5% discount to the bank's closing share price Monday. Bank of America raised about $6.6 billion.
"The size of the stake sale is significant and this has drawn some demand for the U.S. dollar for fund repatriation," the trader said.
A trader at a U.K. bank said the pair tracked the greenback's strength offshore amid renewed risk aversion related to the euro-zone crisis. "Sentiment is moderately hurt, though there's no sign of fund outflows," the trader said.
Traders said volatile trading in the local stock market, amid the backdrop of uncertainty over the euro-zone sovereign debt crisis, will continue to cause some volatility in trading of the U.S. dollar/Hong Kong dollar pair in the near term. They said they expect the U.S. dollar to trade in a range of HK$7.7775 to HK$7.7835 Tuesday.
At 0735 GMT, the blue-chip Hang Seng Index was down 1.0% at 19,323.41.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a 220-point discount to the spot rate, compared to a 217-point discount late Monday.
-By Susanna Tai, Dow Jones Newswires; 852-2832-2338; susanna.tai@dowjones.com
