Countries around the world should gradually rely less on the dollar for trade
and their foreign exchange reserves, a Chinese central bank official said in
comments.
Following his the comments, the dollar briefly fell the yen, but soon
recouped all the earlier losses.
Analysts say China has been gradually diversifying
away from dollar assets in its foreign exchange reserves, the world's largest,
but fears of a collapse in the U.S. currency will prevent it from making any
dramatic shift.
"Internationally speaking, the situation of over-reliance on a certain
country's currency for international trade, settlements and reserve assets
should be gradually changed," Wu Xiaoling, deputy governor of the People's Bank
of China, said in remarks reported by the Financial News on Tuesday.
Wu did not specifically refer to the dollar by name, but it is the world's
main reserve currency and the one in which the bulk of trade is conducted.
Analysts said the comments were too general to signify any concrete change in
policy.
"The central bank is not going to give you a hint in terms of direction of
investment before they really do anything, so I don't read too much into this
sort of general remarks," said Qu Hongbin, economist with HSBC in Hong Kong.
Still, dealers took the comments as a reason to sell the dollar, whose
long-term strength relies partly on central banks' willingness to stock it as
their main reserve currency.
It fell by 03:08 GMT to 115.95 yen from 116.12 prior to the comments. But by
12:16 GMT, the dollar had rallied to 116.49 yen.
Last year, central bank chief Zhou Xiaochuan was cited in state media as
urging domestic companies to use non-dollar currencies, such as euro and
Japanese yen, in foreign trade and investment, to reflect more diverse trading
and investment patterns.
Some government economists have said China should convert some of its foreign
exchange reserves, which hit $875.1 billion at the end of March, into gold to
hedge against weakness in the dollar.
