HONG KONG (Dow Jones)--The Hong Kong dollar fell against the U.S. dollar Monday as lingering concerns about the euro-zone crisis prompted buying of the greenback, which is usually seen as a safe investment.
In late Asian trade, the U.S. dollar was at HK$7.7853, up from HK$7.7812 late Friday. The U.S. unit was fixed at HK$7.7848 earlier Monday.
Traders said the U.S. dollar is likely to be well-supported as investors seek the safety of the greenback following threats of downgrades by major credit ratings agencies in Europe. They said they expect the U.S. unit to trade between HK$7.7830 and HK$7.7880 Tuesday.
"Some foreign banks are buying the U.S. dollar to cover the short positions they put earlier. The news of North Korean leader Kim Jong Il's death didn't have much impact on the USD/HKD trading. The euro-zone debt crisis remains a major focus," said a trader at a Singaporean bank.
Fitch Ratings placed its ratings on six euro-zone nations including Spain and Italy on watch for downgrade after it concluded a "comprehensive solution" to the region's debt crisis is "technically and politically beyond reach." Late Friday, Moody's Investors Service downgraded Belgium two notches, citing risks to and uncertainties about funding, economic growth and the nation's balance sheet.
Another trader at a local bank added: "The transaction volume is rather thin near the year-end and the risk sentiment remains weak, which is supportive for the safe-haven U.S. dollar."
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 127 points to the spot rate, compared with a 130-point discount late Friday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
