"It's pretty much rangebound on the last trading day of the year. But I think the Hong Kong dollar will keep a firm tone in 2006, buoyed by a stronger yuan," said a dealer from a European bank.
Some traders also said the local currency was expected to remain firm because a number of Chinese firms would seek listings in Hong Kong next year that would attract more foreign investment flows to the territory, with support also seen from lingering speculation of a possible further yuan revaluation.
PricewaterhouseCoopers said on Thursday Hong Kong's stock market would probably notch up another record year of IPOs in 2006, with nearly US $26 billion in deals. China's yuan, which was revalued by 2.1 percent in July to 8.11 per US dollar, closed at a record high 8.0702 on Friday.
"The strengthening trend of the renminbi (yuan) and the apparent sentiment that somehow the Hong Kong dollar will strengthen along with it may keep the Hong Kong dollar at the strong side of the range," Joseph Yam, Hong Kong Monetary Authority's Chief Executive, wrote in a weekly column published on the website on Thursday.