Lingering speculation that central banks from the Middle East to China may start holding reserves in currencies other than the dollar sent the currency lower in Asia on Wednesday. Speculators joined exporters in selling dollars for yen, briefly pushing the dollar down to 116.69 yen, the lowest level since March 28, traders said. The dollar recovered to cost 116.96 yen in midafternoon Tokyo trading, down 0.46 yen from late Tuesday in New York. Growing expectations that the European Central Bank will raise interest rates in May also prompted U.S. and European speculators to buy the euro, briefly sending the euro to US$1.2284, the highest level since Jan. 25, dealers said. The euro slid to US$1.2266 by midafternoon, down from US$1.2258 late Tuesday in New York. Qatar's central bank governor said Tuesday the gas-rich nation can hold up to 40 percent of its foreign exchange reserves in euros. A Hong Kong newspaper also on Tuesday quoted a senior Chinese official as saying that China should reduce its holdings of U.S. Treasury bonds. "Suddenly, all these talks of reserves diversification crop up and that's hurting the dollar most," said Kenji Kobayashi, senior foreign exchange manager at Bank of Tokyo-Mitsubishi UFJ. "With the dollar having fallen so much against the euro, there's no reason for it to stay firm against the yen," he said. Japanese import firms and institutional investors were constantly buying dollars, but such purchases were overwhelmed by heavy selling pressure, traders said. The market expects the euro to hold up until the European Central Bank's policy meeting on Thursday. While the bank is expected to keep rates on hold, traders are focusing on ECB President Jean-Claude Trichet's news conference for clues on whether the bank will raise rates in May.