THE Hong Kong dollar's weakness against the US dollar has spilled into the money market, with yields rising, in what bankers called an exaggerated response to movements in the Hong Kong dollar's value. At yesterday's tender of $1.5 billion worth of Exchange Fund 91-day bills, the fund received $4.75 billion worth of applications, and the average yield was 5.81 per cent, the Hong Kong Monetary Authority (HKMA) said. At last week's auction, bidding was more spirited. The fund received $6.96 billion in bids for $1.5 billion on offer, and the average yield was 5.43 per cent, 0.38 percentage points lower than yesterday's average yield. Andrew Fung, HSBC Markets' domestic market manager, said the fluctuations in the bills reflected smaller movements in the Hong Kong dollar against the US dollar. 'Interest rates have shot up,' Mr Fung said. 'We have had very big volatility in interest rates in the past few days.' At one point they went up by 87.5 basis points (0.875 percentage points), before edging back, he said. 'The interest rate market tends to exaggerate movements in the spot exchange rate [between the Hong Kong dollar and the US dollar],' he said, adding that the Hong Kong dollar's fall from $7.73 to $7.741 had unnerved investors though it was minor by foreign exchange standards. People were trading on rumour in the interest rate market, but were not going to bet against the currency because the HKMA showed in January that it would support the dollar peg, Mr Fung said. He said one-month paper had gone from six per cent in recent days to 6.78 per cent, and then edged down to 6.18 per cent. It could repeat that move upwards if the exchange rate went to $7.74, he said. The fund would offer $1.5 billion worth of 91-day bills and $800 million worth of 182-day bills, the HKMA said.