Last week's intervention by the HKMA may have worked The Hong Kong dollar weakened slightly against the greenback yesterday, suggesting multiple interventions by the Hong Kong Monetary Authority (HKMA) late last week may have succeeded in establishing a floor for the US dollar slide, at least in the short term. Speculations of an imminent appreciation of the Chinese yuan also slowed somewhat after the sharp widening of the yuan forward discount on Friday and this also helped ease the upward pressure on the Hong Kong dollar. By the close of trading in Hong Kong, the local dollar had slipped to HK$7.7105 per greenback from an intraday low of $7.7083 and $7.7056 late Friday. At the same time, the one-year forward discount widened further to 350-220 pips from 315-285 pips on Friday, implying a strengthening of the Hong Kong dollar to $7.675 in 12 months. 'The latest round of [HKMA] interventions seems to have worked, since the Hong Kong dollar failed to go below $7.70 despite rumours that there are billions of dollars of [position] liquidations yet to come,' one dealer said. However, the fact that HKMA chief executive Joseph Yam Chi-kwong had also indicated he was quite relaxed about the strengthening and happy to see the speculators against the Hong Kong dollar getting squeezed out of the market, meant there was still doubt about how decisively it was prepared to act, the dealer added. The authority did come into the market twice on Thursday and twice on Friday to stem the rapid strengthening of the Hong Kong dollar to levels well beyond the $7.80 at which it is pegged to the greenback. The Thursday interventions of US$50 million each and the initial Friday buying of US$100 million appeared to have little effect as the Hong Kong dollar continued to advance. However, after the local market closed, the HKMA bought a further US$100 million as the Hong Kong dollar breached HK$7.71 against the greenback and this time, traders seemed willing to accept that the de facto central bank had indeed showed it was not willing to accept a strengthening much beyond there. 'I think it [the HKMA] is trying to set a limit at HK$7.70 which is a psychological level,' said Philip Cheung, research analyst with Bank of America. 'Failure to do so would cause another round of panic selling [of US dollars],' he added.