The Indonesian rupiah's relative stability helped Hong Kong's money-market rates return to the low levels experienced last week but traders said the easing rates did not indicate a return of market confidence.
Both the one-month and three-month interbank lending rates closed 25 basis points lower than their last closes, with one-month rates at 7 per cent and three-month rates at 9 per cent.
The Hong Kong dollar exchange rate remained relatively weak at $7.743 to the US dollar.
Traders said the market was relieved when it saw the Indonesian rupiah stabilise at 9,400 rupiah to the US dollar, down from the psychologically sensitive 10,000 level.
Commonwealth Bank of Australia treasurer Andrew Fung Hau-chung believed the local money market would undergo a period of consolidation, with rates moving sideways while waiting for new developments in the region.
He said lower rates alone might not be sufficient for market activity to return as big lenders had become much more cautious in extending Asian credit after the region's crisis.
