The Hong Kong dollar softened late on Wednesday in rangebound trade, while interbank rates were mixed. "There was little direction in the market. The spot rate hovered in a narrow range for most of the day with some US dollar selling in the morning session but reversed course late in the afternoon," said a dealer from a European bank.

The local currency was trading at 7.7531/33 per US dollar after hitting a session low of 7.7535, softer than 7.7520/21 in Tuesday's late Asian trade.

In the cash market, short-dated interbank rates softened after some banks had lent out liquidity.

The overnight rate was quoted at 3.25/3.50 percent, down from 3.83/3.85 percent in early morning trade, said a dealer at a local bank.

But longer-dated interbank rates nudged higher, taking a lead from firmer US bond yields, dealers said.

The one-month rate rose to 4.65/4.70 percent from Tuesday's close of 4.62/4.67 percent.

The Hong Kong dollar forwards curve steepened slightly on Wednesday on expectation of more US interest rate rises ahead, the European bank trader said.

Copyright Reuters, 2005