"It can work to undermine the reserve status of the dollar and that has big implications globally," he said, adding the euro was being considered as a reserve currency of the future.
The HSBC officials spoke at a press briefing.
The bank predicts the euro will strengthen to $1.40 by the end of 2005 from around $1.32 on Thursday. HSBC expects the dollar to weaken to 98 yen by the end of the year from 102.70 now.
U.S. policymakers have pressed China to relax its controls on the yuan, arguing it is under valued and gives China's exporters an unfair advantage in world markets.
The view was repeated earlier on Thursday by U.S. Commerce Secretary Don Evans, in an interview with Reuters.
But King said China comprised less than a tenth of the dollar's trade weighted basket.
"So let's say that the renminbi will revalue by 20 percent, that would mean a fall in the dollar's trade-weighted exchange rate of only 2 percent," he said, noting the trade deficit had widened in the past two years despite a 20 percent fall in the dollar on a trade weighted basis.
"The current account deficit exists primarily because of the lack of U.S. savings and that needs to be addressed," he said.
The U.S. personal savings rate -- or proportion of money U.S. workers save from disposable incomes -- has been falling for the past two decades. The slide has been particularly severe since 1995, with it falling from about 6 percent to near zero now.
Some analysts say the demand from Asian central banks to park their dollar surpluses in U.S. Treasuries has allowed Americans to spend despite the collapse in savings.
Foreign holdings of Treasuries rose about $216 billion in 2004. Asian central banks increased foreign currency reserves last year by around $500 billion and parked much of it in U.S. debt.
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