The Hong Kong dollar rose against the U.S. dollar Monday, as better-than-expected U.S. jobs figures soothed investor nerves and boosted the territory's stocks, which prompted capital inflows. Traders said a better-than-expected U.S. jobs report Friday helped boost Hong Kong stocks and the domestic currency, which kept the U.S. dollar under pressure. They said they expect the U.S. dollar to trade between HK$7.7650 and HK$7.7730 Tuesday. In late Asian trade, the U.S. dollar was at HK$7.7686, down from HK$7.7735 late Friday. The U.S. unit was fixed at HK$7.7706 earlier Monday. 'Risk appetite improved after better-than-expected U.S. job data Friday, which prompted investors to buy riskier assets. I've also spotted several foreign banks selling U.S. dollars to square their long positions,' said the chief trader at a local bank. U.S. job losses mounted at a more modest pace than expected in August, according to data issued Friday. Nonfarm payrolls fell by 54,000 last month, roughly half the decline that had been expected and in line with the level of revised losses recorded in the previous month.
'I expect selling of the U.S. dollar to continue and the rise of local stocks could lure more inflows,' the trader said.
The blue-chip Hang Seng Index rose 1.8% to 21,355.77, tracking Wall Street's gains Friday.
The Hong Kong interbank offered rates were broadly steady Monday. Morgan Stanley said it expects the benchmark three-month Hibor to stay below 1% until late 2011 as 'the excessive liquidity in the banking system (with HK$148.6 billion Monday) offered a sizable buffer for outflows before interest rates see significant upward pressure'.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 180 points to the spot rate, widening from a 173-point discount late Friday.
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