HONG KONG (Dow Jones)--The Hong Kong dollar was steady against the U.S. dollar late Tuesday after falling earlier in the session, when the greenback's strength offshore amid refreshed worries over euro-zone debt crisis weighed on the local unit.
In late Asian trade, the U.S. dollar was at HK$7.7807, almost unchanged from HK$7.7806 late Monday. The U.S. unit was fixed at HK$7.7812 earlier Tuesday, and hit an intraday high of HK$7.7831 during the Asian trading session.
Traders said they expect the Hong Kong dollar to weaken because of seasonal demand for the U.S. dollar close to the end of the year, when banks usually seek liquidity for window dressing. They expect the U.S. dollar to trade between HK$7.7790 to HK$7.7880 in the near term.
A trader at a Singapore bank said: "The direction of the Hong Kong dollar tends to track the euro and the local stock market."
The euro plunged below $1.32 Monday for the first time in more than two months, which sent investors to the safe-haven greenback, pressuring the Hong Kong unit.
The common currency's drop came after Moody's Investors Service said Monday that last week's European Union summit on the European sovereign-debt crisis didn't reduce the chances of credit downgrades. Fitch Ratings predicted a "significant" economic downturn in Europe as it deemed that last week's summit did "little to ease pressure" on the crisis.
The benchmark Hang Seng Index ended down 0.7% at 18,447.17 Tuesday, narrowing losses of up to 1.5% in the morning session.
The one-year U.S. dollar/Hong Kong dollar contract was quoted at a discount of 135 points to the spot rate, unchanged from late Monday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
