Hong Kong dollar will soon hit low end of trading band - cen bank

HONG KONG, March 22 (Reuters) - Hong Kong's central bank said on Thursday the local currency will very soon hit the low end of its trading band at 7.85 per dollar.

Hong Kong Monetary Authority Chief Executive Norman Chan was speaking after the central bank raised its base rate charged through its overnight discount window by 25 basis points to 2.00 percent, following a rate increase by the U.S. Federal Reserve.

The former British colony pegs its currency to the greenback, and hence, its money market rates mirror that of its U.S. counterparts.

On Wednesday, the Hong Kong dollar hit a 33-year low, inching closer to the lower end of the monetary authority's targeted trading band, as the interest rate gap between U.S. dollar rates and Hong Kong counterpart widened further.

The HKMA has pegged the local currency at 7.8 to the U.S. dollar since 1983, but it allows it to trade between 7.75 and 7.85.

(Reporting By Anne Marie Roantree and Donny Kwok; Editing by Kim Coghill)