Hope You Bought Some Gold

Dollar Falls to Record on China's Plans to Diversify Reserves

By Stanley White and Kosuke Goto

Enlarge Image/DetailsNov. 7 (Bloomberg) -- The dollar slid to record lows against the euro and the Canadian dollar on speculation China's plans to diversify its foreign exchange reserves will involve selling U.S. assets.

The currency slumped after Cheng Siwei, vice chairman of China's National People's Congress, told a conference in Beijing the country should improve the structure of its $1.43 trillion of foreign reserves by favoring stronger currencies. It pared losses after he later added that doesn't mean buying more euros. The dollar also slumped to a 26-year low against the pound and a 23-year low against the Australian dollar.

``Cheng Siwei, a China adviser, apparently said China should diversify into strong currencies,'' said Lee Wai Tuck, a currency strategist at Forecast Singapore Ltd. ``This is one of the comments that triggered the buying of the euro and selling of the dollar.''

The dollar slumped to $1.4666 per euro, the lowest since the 13-nation currency debuted in January 1999, before trading at $1.4615 at 11:31 a.m. in Tokyo from $1.4557 late yesterday. It fell to $1.0975 per Canadian dollar, the lowest since Canada's currency was floated in 1950.

Against the pound, the dollar declined to $2.0947, the lowest since May 1981. The currency slid against the Australian dollar to 93.75 U.S. cents, the lowest since April 1984 from 92.87 U.S. cents. The dollar may fall to $1.4700 per euro today, Lee forecast.

China Investment Corp., which manages the nation's $200 billion sovereign wealth fund, said last month it may get more of the nation's reserves to invest to improve returns.