Most Hong Kong interbank rates and forward rates edged higher on Thursday after persistent fund outflows from the territory and as local banks kept interest rates unchanged despite another 25 basis points hike in US interest rates overnight. The one-month interbank rate was quoted at 0.85-0.90 percent, up from 0.79-0.84 percent on Wednesday. The discount on one-year forwards narrowed to 1,155/1,135 pips from Wednesday's close of 1,245/1,225 pips.

Meanwhile, the local currency was steady after recent declines but dealers said it could attract more arbitrage trading in the near term.

"More outflows are expected due to the widening interest rate differential between the Hong Kong dollar and the US dollar," said a dealer at a local bank.

Copyright Reuters, 2005