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11/27/2004:

"Dollar hits new low on fears over Chinese reserves"

The dollar fell to new lows on Friday on rumours that China may shift some of its currency reserves away from the greenback, highlighting the extent of dollar-related jitters in financial markets.

The fragility in currency and bond markets has centred on fears that Asian central banks may begin to dump US assets to avoid large losses as the dollar's value falls. The nervous state of the markets was highlighted by Friday's investor reaction to a newspaper report, later retracted, that China's central bank was cutting its holdings of US Treasury bonds.

The dollar dropped sharply after China Business News quoted Yu Yongding, a member of the central bank's monetary policy advisory committee and a respected professor of economics, as saying China had cut its holdings of US government debt.
Full Article: nytimes.com/reuters