The euro rallied from its three-month lows against the dollar on Tuesday after the Chinese government said it was increasing its euro reserves in its foreign exchange portfolio.

At 1400 GMT, the single currency was up at $0.8840 against the dollar, rallying nearly half a cent from Monday's New York close of $0.8793. Earlier in the day the euro hit a three-month low of $0.8767.

The single currency was boosted against most other leading currencies after news of the Chinese government's decision to raise the proportion of euros in its foreign exchange reserves. China would not comment on the increase.

Comments from the Organisation for Economic Co-operation and Development (OECD) on the US currency. The OECD said that the world's developed nations were in a synchronised recession for the first time in two decades. It also said that the US should cease its aggressive monetary easing as the full impact of the shocking events of September 11 had not yet been seen.

The yen was also a little stronger against the dollar, pending an announcement by the Japanese government over a second supplementary budget.

The yen was at Y122.65 against the dollar, having recovered from Monday's New York close of Y123.31.

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Previous currencies reports
Thursday: Dollar follows Wall Street higher
Wednesday: Dollar edges lower as US equities rally fades
Tuesday: Dollar firms on buoyant retail sales

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