HONG KONG (Dow Jones)--The Hong Kong dollar fell again Wednesday as continued weakness in local equities triggered mild capital outflows.
In late Asian trade, the U.S. dollar was at HK$7.7924, up from HK$7.7901 late Tuesday. The U.S. unit was fixed at HK$7.7925 earlier Wednesday.
The Hong Kong dollar also fell Friday, Monday and Tuesday.
Traders said they expect further strength in the U.S. dollar in the near term amid risk aversion generated by the euro-zone sovereign-debt crisis. They said they expect the greenback to trade in a range of HK$7.7920 to HK$7.7970 Thursday.
"It seems there are some steady outflows amid the recent weakness in local equities. Although I've spotted some European banks and local banks selling the U.S. dollar on profit-taking this morning, other foreign banks are quickly buying the greenback," providing the U.S. dollar strong support, a senior trader at a local bank said.
The blue-chip Hang Seng Index fell 2.1% to 17,864.43 Wednesday as investors remain worried about the euro zone, especially a potential downgrade of France's sovereign-credit rating. It was the sixth decline in seven sessions.
"I expect the U.S. dollar may rise further and test HK$7.8000 later this week if the decline in local equities persists," the trader said.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 230 points to the spot rate, narrowing from a 260-point discount late Tuesday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
