*mid-point of bid-offer spread
The lack of any concrete measures at the weekend meeting of the Group of Seven to help Greece's debt problems pushed the Hong Kong dollar lower against the U.S. unit late Monday.
In late Asian trade, the U.S. dollar was at HK$7.7719, up from HK$7.7712 late Friday. The U.S. unit was fixed at HK$7.7706 earlier Monday.
The U.S. dollar will likely make gains ahead of the Lunar New Year holiday that starts Saturday as investors are risk averse, though trading will likely be quiet, traders said.
'I'm not sure if the (foreign exchange, equities, and commodity) market has fully priced in sovereign risks in Europe, but current positioning implies a very bullish view on the U.S. dollar and investors are very cautiously boosting their U.S. dollar holdings further from here,' a senior trader from a local bank said.
The U.S. dollar will likely meet immediate resistance at HK$7.7740 later this week, he said.
European Central Bank President Jean-Claude Trichet's comments Saturday in Iqaluit, Canada, where the G7 meeting was held, didn't help soothe worries over Greece's credit woes, traders said. The ECB said it expects 'the Greek government will take all necessary decisions' to cut its debt burden, while it 'will continue to monitor closely' these steps.
The benchmark Hang Seng Index's 0.6% fall to 19,550.89 also weighed. The index has lost 5.7% since Thursday.
The one-year U.S. dollar/Hong Kong dollar forward contract was quoted at a discount of 163 points to the spot rate, compared with a 167-point discount late Friday.
Under the currency board system, the Hong Kong dollar is allowed to trade between HK$7.75 and HK$7.85 to the U.S. dollar.
