HONG KONG (Dow Jones)--The Hong Kong dollar was up slightly against the U.S. dollar Monday buoyed by a rebound in the local stock market and better risk sentiment following a report that the International Monetary Fund was preparing a bailout for Italy.
However, the local dollar came off its peak after the IMF later Monday denied the report on aid for Italy.
In late Asian trade, the U.S. dollar was at HK$7.7944, down from HK$7.7959 late Friday and off from intraday low of HK$7.7935. The U.S. unit was fixed at HK$7.7938 earlier Monday.
Traders said the local currency saw some consolidation after the selling spree last week, following greater stability in the euro and global equity markets, and is likely to stay calm in the near term.
The traders said they expect the U.S. dollar to trade between HK$7.7930 and HK$7.7970 Tuesday.
"Transactions are thin as investors stay on the sidelines for clearer catalysts, after some fund outflows were seen last week amid global volatility," said a senior trader at a Chinese bank.
The benchmark Hang Seng Index ended up 2.0% at 18,037.81, boosted by a surge in U.S. retail spending over the Thanksgiving weekend.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 183 points to the spot rate, compared to a 190-point discount late Friday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
