HONG KONG (Dow Jones)--The Hong Kong dollar climbed against the U.S. dollar Tuesday due to a rise in domestic equities, which boosted demand for the local currency.
In late Asian trade, the U.S. dollar was at HK$7.7931, down from HK$7.7944 late Monday. The U.S. unit was fixed at HK$7.7940 earlier Tuesday.
Traders said the greenback is likely to consolidate in a HK$7.7900-HK$7.7950 band Wednesday as investors remain on the sidelines of a volatile market. Most investors are also less eager to open new positions near the end of the year, which should leave the U.S. dollar/Hong Kong dollar pair in a tight range next month, the traders added.
A senior trader at a local bank said a major U.K. bank had sold about US$100 million at the HK$7.7940 level "amid the fall of the greenback against the euro overnight."
"The rise in local equities has improved risk appetite, boosting demand for the local currency. Some investors are selling the U.S. dollar on profit-taking," the trader added.
The blue-chip Hang Seng Index climbed 1.2% to 18,256.20, tracking a rise in U.S. stocks overnight.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 150 points to the spot rate, compared with a 183-point discount late Monday.
-By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com
