HONG KONG (Dow Jones)--The Hong Kong dollar rose against the U.S. dollar for the fourth straight session, tracking strength in regional equity markets on renewed hopes for a Greek bailout.
In late Asian trade, the U.S. dollar was at HK$7.7561, down from HK$7.7579 late Monday. The U.S. unit was fixed at HK$7.7561 earlier Tuesday.
Traders reckon the local currency will stay strong in the near term, but see limited upside for the unit given its peg with the greenback. They expect the U.S. dollar to trade in a band of HK$7.7540-HK$7.7600 in coming sessions.
"The Hong Kong dollar has been following the overall strength of Asian currencies as investor risk appetite comes back," with regional equities picking up amid renewed hopes that a deal may be reached in the ongoing Greek debt negotiations, said a senior trader at a local bank.
Speaking in Brussels, Greek Prime Minister Lucas Papademos raised hopes that a deal on a second bailout could be struck by the end of the week with the troika of the European Union, European Central Bank and the International Monetary Fund, citing significant progress in talks with private creditors.
The benchmark Hang Seng Index ended 1.1% higher at 20,390.49.
Under Hong Kong's currency board system, the Hong Kong dollar is allowed to trade in a range of HK$7.7500 to HK$7.8500 to the U.S. dollar.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 58 points to the spot rate, compared with a 73-point discount late Monday.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
