US dollar loses its power

Foreign exchange markets felt the impact of China's growing economic muscle this week when a report claiming the country's central bank had sold US Treasuries helped push the euro to all-time highs, underscoring market sensitivity about a possible yuan revaluation.

Forex markets saw the euro climb to 1.3329 dollars in early European trading Friday after a report in the China Business News quoting Yu Yongding, a member of the &to=http:// ' target=_blank>monetary policy committee under the central bank.

"Undoubtedly it was a major cause of the dollars selling across the board," said Callum Henderson, head of forex operations at Standard Chartered bank in Singapore, says Channel News Asia.

According to the Bloomberg, the &to=http:// ' target=_blank>dollar may drop for an eighth week and set a record low against the euro after the world's major central banks signaled they will allow the currency to extend its slide, a Bloomberg survey indicates.

Sixty-eight percent of the 59 strategists, investors and traders polled on Nov. 26 from Tokyo to New York advised selling the dollar against the euro. Participants also predicted the U.S. currency will weaken against the yen, British pound, Swiss franc and Australian dollar.

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