Source AP ©

Dollar skid to record low against euro in Asia trading

The dollar skid to a record low against the euro Wednesday in Asia on speculation that China may shift more of its foreign currency stockpiles - the world's largest - into the European unit and away from the greenback.

The euro jumped to a record US$1.4666, compared with US$1.4554 late Tuesday in New York. The 13-nation currency reached the previous record high of US$1.4571 in late European trading on Tuesday.

The U.S. dollar fell to 113.90 yen by midafternoon, down from 114.57 yen late Tuesday in New York.

Reuters reported a senior Chinese political figure as saying Wednesday that China should diversify its $1.43-trillion foreign exchange reserves into the euro and other strong currencies. The comments ignited a broad sell-off of the dollar, traders said.

The U.S. currency pared some losses against the euro later in the session. But traders said the dollar, which has been weakening due to concerns over the U.S. economy and expectations of more cuts in U.S. interest rates, could fall further and broadly.

"Charts indicate that the euro still has plenty of room to go up" versus the dollar, said Mamoru Arai, a senior vice president of the foreign exchange division at Mizuho Corporate Bank.

Even if there are signs of improvement in the U.S. economy, they may do little to cool the euro's appreciation because "Russia, China and Middle-Eastern nations are steadily diversifying their foreign exchange reserves" by selling dollars for the European unit, Arai said.

Rising oil prices also supported the European currency because of speculation that oil-exporting nations were selling dollars earned from petroleum sales to buy more euros, traders said.

However, the dollar is likely remain directionless against the yen in days ahead, Arai said. "Who wants to buy the yen?" with Japan's low interest rates, sluggish stocks and stalled economic reforms amid political confusion, he said.

The dollar was mixed against other regional currencies, rising to 7.7680 Hong Kong dollars from 7.7654 the previous day, and to 39.260 Indian rupees from 39.24. It fell to 1.4428 Singapore dollars from 1.4462, and to 904.4 South Korean won from 907.8.

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