The Hong Kong dollar was choppy against the US dollar on Friday and dealers said near-term direction would continue to be dictated by the stock markets. "The (USD/HKD) spot rate opened at around 7.7680 but then rose to 7.7720-7.7730 when the stock market opened and fell over 300 points," said a dealer at a local bank.

"However, the local stocks pared some losses following a rebound in the Shanghai stock index, and the spot rate eased." Another dealer said some profit-taking emerged after the (USD/HKD) spot rate rose above 7.7750 early this week. The Hong Kong dollar has weakened in recent weeks, partly because of a correction in the stock market pressured by China's move to tighten liquidity. The local currency touched a low of 7.7768 against the US dollar on Wednesday, its weakest level since September 2008.

Copyright Reuters, 2010