The following is a snapshot of the Hong Kong foreign exchange and money markets on Friday.

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At 0415 GMT At 0908 GMT

HK$ SPOT 7.7501/02 7.7500/01

FORWARDS

Three-month -46/-40 -45/-40

Six-month -85/-70 -70/-60

One-year -105/-85 -100/-80

INTERBANK RATES (PERCENTAGE)

Overnight 0.10/0.25 0.15/0.20

One-month 0.80/0.95 0.85/0.95

Three-month 1.80/1.95 1.85/1.95

Six-month 2.10/2.25 2.15/2.25

One-year 2.30/2.45 2.35/2.45

* The Hong Kong dollar was trapped in a narrow range against the U.S. dollar on Friday after aggressive intervention by the central bank this week to keep the local currency within its trading band.

Dealers said the Hong Kong Monetary Authority (HKMA) may step in to the market again, as demand for the Hong Kong dollar remains strong.

The local currency repeatedly hit 7.7500 to the U.S. dollar this week, forcing the Hong Kong Monetary Authority (HKMA) to step in to the market to curb its appreciation. The HKMA injected a total of HK$32.319 billion (US$4.17 billion) into the banking system in the past three days, with the aggregate balance — the sum of balances on clearing accounts maintained by banks with the HKMA — projected to increase to a record high of HK$84.272 billion on Nov. 24 when the transactions are settled.

The head of the HKMA, or central bank, Joseph Yam said on Thursday the strength of the Hong Kong dollar was due to robust demand for the local currency amid the deleveraging of perviously long U.S. dollar positions and the repatriation of funds by corporations or investors probably to meet their commercial needs or upon liquidation of overseas investments.

One dealer said huge carry trade volume was seen over the past year and it was hard to determine how much of such trades were being unwound. The Hong Kong currency is pegged at 7.8 to the U.S. dollar but can trade between 7.75 and 7.85.

* Local interbank rates eased on Friday due to a large aggregate balance in the banking system. The one-month interbank offered rate was fixed at 0.95786 percent, down 4.2 percent from Thursday. The three-month Hibor fell 5 basis points to 1.95 percent, the lowest level since June 2. Dealers said there was limited room for interbank rates to fall further as players remained cautious about lending.

* The discount on Hong Kong dollar forwards widened slightly from the previous session. One dealer said there was sporadic selling interest in the shorter-dated forwards, but overall trading volume was thin.

MARKET/ECONOMIC NEWS

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Source: http://www.afxnews.com

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