HONG KONG (Dow Jones)--The Hong Kong dollar fell against the U.S. dollar Tuesday due to year-end demand for the U.S. unit from a major U.K. bank and some local banks. Traders said the U.S. dollar isn't likely to gain much in the remaining days of the year as banks have almost completed their year-end purchases of the U.S. unit. They said they expect the U.S. dollar to trade between HK$7.7780 and HK$7.7840 Wednesday. In late Asian trade, the U.S. dollar was at HK$7.7818, up from HK$7.7797 late Friday. The U.S. unit was fixed at HK$7.7814 earlier Tuesday. Hong Kong's financial markets were closed Monday for the Christmas holiday. "A major U.K. bank has been buying the U.S. dollar since late Friday to square its positions, pushing the U.S. dollar above the HK$7.7800 level," said a trader at a Singapore bank. A trader at a U.K. bank said some local banks bought the U.S. dollar during the morning because of corporate demand. "Still, I expect to see some profit-taking once the U.S. dollar nears the HK$7.7830 level, as the U.S. dollar has been rising steadily since Wednesday" the trader said. "Besides, the latest tightening move in China last week was broadly in line with market expectations and isn't likely to trigger massive capital outflows," the trader added. China's central bank said Saturday it will raise benchmark deposit and lending rates by 0.25 percentage points, its second rate hike in 10 weeks to curb inflation pressures. China's consumer price index rose 5.1% in November from a year earlier, the fastest increase in more than two years. The one-year U.S. dollar/Hong Kong dollar forwards contract was quoted at a discount of 167 points to the spot rate, narrowing slightly from a 170-point discount late Friday. -By Chester Yung, Dow Jones Newswires; 852-2832 2331; chester.yung@dowjones.com

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