LONDON (AFP) — The dollar dipped on Friday amid fading expectations of any joint effort by world finance chiefs to talk up the sagging greenback at a key meeting in Washington, dealers said.
In early European trading, the euro rose to 1.5834 dollars from 1.5742 in New York late on Thursday, when it had hit a record high 1.5913 as the European Central Bank left eurozone interest rates unchanged at 4.0 percent.
Against the Japanese currency, the dollar eased to 101.81 yen from 101.88 on Thursday.
Dealers said the euro had eased off its peak after remarks by ECB president Jean Claude-Trichet, who said uncertainty over eurozone economic growth had increased.
Traders were turning their focus to a meeting of finance ministers and central bankers from the Group of Seven (G7) rich nations which kicks off in Washington later on Friday.
Global investors are hoping for action to help ease gridlock in world credit markets. But traders were betting that the G7 would refrain from mentioning the weakness of the greenback in its post-meeting statement.
The meeting of the finance officials from the G7 -- Britain, Canada, France, Germany, Italy, Japan and the United States -- comes on the eve of the spring meetings of the IMF and World Bank this weekend in Washington.
"We don't expect that the G7 communique will be altered to explicitly protest against dollar weakness," wrote NAB Capital's John Kyriakopoulos in a research note.
Barclays Capital analysts shared that view, telling clients: "We do not expect any major comment on the forex side as the depreciation in the dollar, at least so far, has arguably been consistent with relative economic fundamentals."
Market players widely expect the US Federal Reserve to cut rates again at its meeting later this month, following cumulative reductions of 300 basis points since last September to ease a credit crunch and boost the economy.
The widening interest rate differential between the US and the eurozone is expected to diminish the dollar's attractiveness, dealers said.
The euro, meanwhile, eased off its record highs against the British pound after the Bank of England (BoE) cut its benchmark lending rate by 25 basis points to 5.0 percent on Thursday.
Elsewhere Friday, dealers digested news that China's foreign exchange reserves, already the world's largest, climbed to 1.682 trillion dollars at the end of March, the central bank said Friday.
The figure reflects a rise of 39.9 percent from a year earlier, and a 10.1-percent increase from the end of 2007, according to data posted on the People's Bank of China's website.
The fast forex growth came amid rising official concerns of a fresh surge in hot money inflows, spurred by a strengthening yuan and a widening spread between falling US interest rates and rising Chinese rates.
In London on Friday, the euro changed hands at 1.5834 dollars against 1.5742 late on Thursday, at 161.20 yen (160.38), 0.8011 pounds (0.7985) and 1.5884 Swiss francs (1.5871).
The dollar stood at 101.81 yen (101.88) and 1.0031 Swiss francs (1.0078).
The pound was at 1.9765 dollars (1.9708).
On the London Bullion Market, the price of gold fell to 926 dollars per ounce from 928 dollars late on Thursday.
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