"If China persistently tightens its monetary policy forcing Chinese banks to repatriate funds back to the mainland, capital inflows from the mainland (to Hong Kong) will definitely come down and that could further weaken the local currency," said a dealer at a regional bank. "The next move (of the Hong Kong dollar) will be dictated by fund flows." The local currency was quoted at 7.7607/08 versus the US dollar, having earlier hit 7.7625, its lowest level since mid-October 2008. The Hong Kong dollar is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85.
"If China persistently tightens its monetary policy forcing Chinese banks to repatriate funds back to the mainland, capital inflows from the mainland (to Hong Kong) will definitely come down and that could further weaken the local currency," said a dealer at a regional bank. "The next move (of the Hong Kong dollar) will be dictated by fund flows." The local currency was quoted at 7.7607/08 versus the US dollar, having earlier hit 7.7625, its lowest level since mid-October 2008. The Hong Kong dollar is pegged at 7.80 to the US dollar but can trade between 7.75 and 7.85.