The U.S. dollar pared its losses against other major currencies Wednesday after Treasury Secretary Timothy Geithner clarified his earlier comments, saying that the dollar remains the world's reserve currency. Geithner said Wednesday the U.S. dollar remains the main global reserve currency and he does not see a change in that status in the foreseeable future. Earlier this week, People's Bank of China Gov. Zhou Xiaochuan called for a new international reserve currency to replace the dollar. Zhou suggested that the International Monetary Fund's Special Drawing Right (SDR) should be given a greater role. Read more on Chinese currency proposal. Speaking at the Council on Foreign Relations in New York, Geithner said that Zhou was "a sensible man" and that "everything he said deserves consideration." The dollar fell sharply on confusion about Geithner's comments regarding SDRs. The Treasury secretary subsequently clarified his comments. Meg Browne of Browne Brothers Harriman said that the market has "blown this way out of proportion," referring to Geithner's comments. "[President] Obama has said that there's no need for another reserve currency," Browne said. "To use the SDR as a new reserve currency is really a stretch." The SDR is an international reserve asset, created by the IMF in 1969 to support the Bretton Woods fixed exchange rate system. Its value is based on a basket of key international currencies. The dollar index (DXY: 83.68, -0.18, -0.2%) , a measure of the greenback against a trade-weighted basket of six major currencies, was last down 0.8% at 83.70 compared with 83.39 after Geithner's initial comments. In recent trading, the dollar was down 0.6% to 97.49 Japanese yen after earlier hitting an intraday low of 96.89 yen. The euro rose 0.5% to $1.3557; earlier, it surged to an intraday high of $1.3647. Before Geithner's comments, the euro had slipped against the dollar after a closely-watched gauge of German business sentiment fell to another historic low. The business-climate index produced by the Munich-based Ifo Institute fell to 82.1 from a reading of 82.6 in February. Expectations were for a reading of 82.2. See full story. The Czech koruna was on the defensive, extending losses after the Czech Republic's coalition government lost a no-confidence vote Wednesday. The koruna slipped 0.4% versus the euro. The British pound slipped after the Confederation of British Industry said sales volume at U.K. retailers fell more than expected in March. The CBI's retail sales balance index fell to -44 from -25 in February. The balance reflects the difference between the percentage of retailers reporting increased sales and those reporting lower sales. Economists had forecast a fall to -35. The British pound fell 0.5% to $14645. Norway's krone after rate cut The Norwegian currency dropped against the euro and the U.S. dollar Wednesday after Norway's central bank cut its benchmark interest rate by 50 basis points to 2.00%. "The outlook for the global economy has deteriorated," Norges Bank said in a statement. "In order to mitigate the impact in Norway, the interest rate is being reduced." The key policy rate may move down towards 1% in the course of the autumn, the central bank said. The decline in activity in the Norwegian economy will be more pronounced than previously assumed, it said. The Norwegian krone fell 2.2% against the dollar and 3% against the euro. Elsewhere in Europe, the Bank of Poland reduced its benchmark interest rate by 25 basis points to 3.75% on Wednesday, meeting market expectations. "There are good reasons for the cut," said Lars Christensen, chief analyst at Danske Bank. "First, the downtrend inflation is continuing. Second, economic activity has dropped significantly in Poland in recent months and finally, the zloty seems to have stabilized somewhat after the sell-off earlier in the year."

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