The news sent an already weak dollar tumbling across the board, taking the euro above 1.47 usd and the pound over 2.10 usd. The euro's rise also marks a key event -- at current levels the euro is now higher against the dollar than the Deutschmark ever was. While the Chinese official in question, Cheng Siwei, went on to add: 'I didn't mean we should buy more euros', the hapless dollar could not make any significant comeback.
'Almost one month to the day after Chinese officials addressed the option of destabilizing the already beleaguered US dollar by selling some of its reserves, a vice chairman of the Chinese People's Political and Consultative Conference, parliament's top advisory body, said China should diversify its 1.43 trln usd in currency reserves by buying more strong currencies such as the euro,' observed Ashraf Laidi at CMC.
'The current macro environment does not bode well for the US dollar. With commodity prices remaining strong, and uncertainty regarding the US economy high, we see no scope for the dollar to appreciate at present,' said Manuel Oliveri at UBS.