HONG KONG (Dow Jones)--The Hong Kong dollar rose slightly against the U.S. dollar late Wednesday as the sell-off in risk assets took a breather, and a stable local stockmarket lent some support to the Hong Kong unit.
Traders said concerns over the euro-zone sovereign debt issue continue to weigh on sentiment, and the U.S. dollar, which remains strong in offshore trading, should be well-supported in the weeks ahead.
In late Asian trade, the U.S. dollar was at HK$7.7799, down from HK$7.7807 late Tuesday. The unit was fixed at HK$7.7795 earlier Wednesday.
Traders expect corporate demand for the greenback to be firm toward year-end as banks accumulate the dollar for window-dressing activities. They see the U.S. dollar trading between HK$7.7750 and HK$7.7850 in the next few weeks.
"Transaction volume is shrinking as the year end approaches. I expect risk appetite to remain weak amid ongoing concerns over the debt crisis in Europe. This should provide support for the U.S. dollar," a senior trader at a local bank said.
Another trader at a U.S. bank said uncertainties in Europe will continue to damp interest in risk currencies. "I think the pair will remain rangebound between now and the end of the year," the trader said.
A stabilizing local stock market provided some support for the local currency. At 0730 GMT, the Hang Seng Index was down 0.1% at 18,431.87, after falling 4.1% over the past four sessions.
The one-year U.S. dollar/Hong Kong dollar contract was quoted at a discount of 130 points to the spot rate, compared with a 135-point discount late Tuesday.
-By Susanna Tai, Dow Jones Newswires; 852 2832 2338; susanna.tai@dowjones.com
