USD hurt by China foreign reserves announcement

The US dollar suffered after China said Wednesday that it will diversify its foreign-exchange reserves to favor stronger currencies over weaker currencies.

The announcement was made at a conference in Beijing where a vice director of China’s central bank said that the dollar “is losing its status as a world currency”, while an economist from the Chinese Academy of Social Sciences said that China would “inevitably reduce” its holdings in the US dollar as it is challenged by the euro and other currencies.

The news sent the greenback to another new low versus the euro, to a 58-year low against the Canadian dollar and to a 23-year low in relation to the Australian dollar.

The US dollar fell to $1.4371 to the euro during New York trade before gaining back to $1.4349 to the euro at about 1:30 p.m. in New York, while it traded at $2.1045 in relation to sterling.

The greenback traded at ¥112.9050 versus the yen, while one US dollar was worth A$1.0742 and one Canadian dollar was equal to $1.0887 US dollars.

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