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Dollar Weakens On China RRR Cut, Greek Hopes

The U.S. dollar traded lower against other major currencies in the Asian session on Monday as investors reduced holdings of the currency on easing worries about the eurozone economy and a rate cut by the Chinese central bank.

Eurozone finance ministers will meet in Brussels today to decide on 130 billion euros in Greek aid. On Sunday, Greek Prime Minister Lucas Papademos flew to Brussels to press the deal.

Meanwhile, the People's Bank of China has decided to cut the banks' reserve requirement rate for the second time in three months to boost lending amid sluggish economic growth.

The central bank said, in a statement posted on its website on February 18, that it will lower the reserve requirement ratio by 50 basis point, effective February 24, to 20.5 percent for large commercial banks.

The move underlined its efforts to ease short-term credit crunch and is estimated to release CNY 400 billion in capital into the market.

The dollar fell to 1-week lows of 0.9141 against the franc and 1.3238 against the euro in early deals and moved sideways thereafter. The greenback is now trading at 0.9157 against the franc and 1.3209 against the euro, compared to last week's close of 0.9189 and 1.3153, respectively.

After hitting a new multi-month high of 79.90 against the yen in early trading, the greenback fell shortly. The pair is now trading near last week's close of 79.52.

Japan saw a merchandise trade deficit of 1.475 trillion yen in January, the Ministry of Finance said today.

That was even worse than forecasts for a shortfall of 1.456 trillion yen following the downwardly revised deficit of 205.6 billion yen in December.

Against the pound, the dollar touched an 11-day low of 1.5882 with 1.59 seen as the next downside target level. The pair closed Friday's deals at 1.5838.

French business confidence indicator for February and Italian industrial orders for December are expected in the European session.

The U.S. markets are closed today for Washington's birthday.

by RTTNews Staff Writer

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