The dollar fell against the euro, heading to its biggest weekly decline in a month, and dropped versus the yen after a government report showed the U.S. trade deficit widened in January to the second biggest ever.
The deficit, the amount by which imports exceed exports, increased to $58.3 billion in January from a revised $55.7 billion in December, the Commerce Department said in Washington. The dollar/yen was trading at 105.85 at 10:35 A.M. Central Time in the U.S.
Japanese Prime Minister Junichiro Koizumi said yesterday his country needs to consider diversifying its foreign-exchange reserves, the world's largest. The comments helped send the dollar to a two-month low against the euro. Japanese investors are the largest foreign holders of U.S. Treasury securities.
China's central bank reduced the share of its currency reserves held in dollars and raised its holdings of euros last year. Seventy-six percent of China's reserves, the world's second largest, were in dollars last year, down from 82 percent in 2003.