* Russia stresses need for new reserve currency
* BRIC urges "diversified international monetary system"
* U.S. data shows higher housing starts, muted inflation
(Adds comment, updates prices, changes byline)
By Wanfeng Zhou
NEW YORK, June 16 (Reuters) - The dollar fell across the
board on Tuesday, pressured by comments from Russia suggesting
a need for a global reserve currency other than the greenback.
Reduced safe-haven demand for the dollar also weighed after
data showing a rebound in U.S. housing starts and an
unexpectedly small rise in producer prices. Investors snapped
up higher-yielding currencies such as the Australian dollar.
But Russia's dollar-negative comments dominated the market,
a day after the country's finance minister backed the
greenback's role as the world's reserve currency. For more see
[].
"Clearly the largest holders of U.S. Treasuries are
increasingly nervous about the fiscal stability of the U.S.
going forward," said Omer Esiner, senior currency analyst at
Travelex Global Business Payments in Washington. "That said, I
don't think it's to anybody's interest to see a run on the
dollar."
In early afternoon trading in New York, the euro traded 0.4
percent higher at $1.3840 <EUR=EBS> on electronic trading
platform EBS.
The euro had gained after German think-tank ZEW said its
economic sentiment index surged to 44.8 in June from 31.1 in
May, exceeding expectations for a reading of 35.0 and
suggesting market optimism for a recovery this year.
[]
The dollar fell more than 1 percent against the yen to
96.44<JPY=EBS>, on pace for its largest one-day fall in more
than two weeks.
The ICE Futures' dollar index <.DXY> , which tracks the
value of the greenback against a basket of currencies, dropped
0.6 percent to 80.699.
BRIC COMMUNIQUE
The summit of Brazil, Russia, India and China (BRIC)
steered clear of any direct assault on the U.S. dollar's
dominance. However, in a joint communique the leaders of the
world's biggest emerging economies called for "a stable,
predictable and more diversified international monetary
system." See [].
A Russian delegation source also told Reuters that BRIC
finance ministries and central banks were tasked to work on
reserve currencies proposals.
Ronald Simpson, managing director of global currency
analysis at Action Economics in Tampa, Florida, said the
communique appears to "have taken some wind out of the dollar's
sails for now."
Despite the lack of direct reference in the communique to
the dollar's future role as a global reserve currency, Simpson
said that BRIC's demand for a more diversified currency system
is "not exactly a subtle hint about the dollar."
"The market is looking at the overall mindset of BRIC," he
said. "The kind of shift in global thinking (on the greenback's
role) has weighed the dollar down."
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by
Chizu Nomiyama)
