HONG KONG (Dow Jones)-- The Hong Kong dollar fell against the U.S. dollar Friday, as weakness in local stocks dragged down the Hong Kong unit, and as risk-averse investors rallied around the greenback amid on-going euro-zone woes.
In late Asian trade, the U.S. dollar was at HK$7.7807, up from HK$7.7753 late Thursday. The U.S. unit was fixed at HK$7.7793 earlier Friday.
Traders expect the U.S. dollar to trade in a HK$7.7760 to HK$7.7910 band Monday.
The U.S. dollar saw strong buying interest in offshore markets as investors sought its safety while they wait for greater clarity to emerge from the ongoing European Union summit.
At 0645 GMT, the local blue-chip Hang Seng Index was down 2.4% at 18,643.07.
"Developments in Europe continue to be a concern and we expect the U.S. unit may see further upside as it is viewed as a safer-haven currency," said a senior trader at a China-based bank.
Gains in the U.S. dollar also came on the back of an International Monetary Fund statement this week upholding the city's 28-year-old currency peg to the dollar. The IMF noted that the "high degree of flexibility of the Hong Kong economy" would help underpin the currency regime and "facilitate a real exchange rate adjustment to changing economic circumstances."
The one-year U.S. dollar/Hong Kong dollar contract was quoted at a discount of 140 points to the spot rate, compared with a 165-point discount late Thursday.
-By Susanna Tai, Dow Jones Newswires; 852 2832 2338; susanna.tai@dowjones.com
