Dollar devaluation

Nov. 26 (Bloomberg) -- The dollar gained against the yen after Yu Yongding, a Chinese central bank official, denied saying his country had trimmed its holdings of U.S. Treasury securities.

The U.S. currency earlier today fell to the lowest since 2000 after China Business News reported Yu said China had cut its holdings of U.S. debt. Yu, a monetary policy committee member, said the report was "distorted,'' in a statement on the Web site of the Institute of World Economics and Policies of the Chinese Academy of Social Sciences, where he is a director.

  Bloomberg article

He says the statement was a "distortion", but did the holdings cut take place?

The dollar is still set for a weekly drop against the euro amid concern the U.S. current account deficit will undermine demand for the currency and policy makers will refrain from stemming its slide. Speculation central banks will reduce their dollar holdings contributed to the currency's drop, said Adrian Hughes, a currency strategist at HSBC Holdings Plc. in London.

Russian central bank official Alexei Ulyukayev told reporters in Moscow three days ago it may reduce the share of dollars held in its currency reserves. Indonesia may reduce holdings of dollars should the currency continue to slide, said Aslim Tadjuddin, deputy governor for monetary policy at the central bank, in an interview in Jakarta today.

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China is the second-largest foreign holder of U.S. notes. The country's central bank declined to comment on the report that it had reduced its holdings.

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China reduced its U.S. Treasury note holdings to $180 billion, China Business News said. Yu said in his statement that he knew "nothing about the actions that (the State Administration of Foreign Exchange) has taken and will take.''

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DaimlerChrysler AG, the world's fifth-largest carmaker, said the dollar's decline against the euro will reduce the earnings of the Mercedes-Benz luxury car division.

"We weren't prepared for the dollar to be at this level,'' Thomas Weber, the management board member responsible for research, told journalists at a dinner in Frankfurt yesterday. "It will influence the results at Mercedes and 2005 won't be an easy year.''

Yeah, well, ready or not....