HONG KONG (Dow Jones)--The Hong Kong dollar fell against the U.S. dollar Friday on weak Asian shares and as investors shifted funds back to the safe-haven greenback, following a broad selloff in Europe and Wall Street overnight.
In late Asian trade, the U.S. dollar was at HK$7.8020, up from HK$7.7927 late Thursday. The U.S. unit was fixed at HK$7.8001 earlier Friday.
Traders expect the U.S. dollar to trade between HK$7.8030 to HK$7.7840 in the near term.
Some European banks were spotted selling the U.S. dollar above the psychological level of HK$7.8000 on profit taking, said a trader at a Singapore bank. "But the Hong Kong dollar tends to stay weak when the stock market is still under pressure," he said.
The benchmark Hang Seng Index ended down 3.1% at 19,399.92, following Wall Street's losses overnight and European markets' continued drop Friday.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 500 points to the spot rate, widening from a 402-point discount late Thursday.
Citigroup said the wider discount reflects global U.S. dollar funding concerns, rather than speculation over the local currency's possible depegging from the U.S. unit.
-By Fiona Law, Dow Jones Newswires; 852-2802-7002; fiona.law@dowjones.com
