* Investors move quickly on SDR comment
* Geithner clarifies dollar to remain top reserve currency (Adds comment, updates prices, changes byline)
By Gertrude Chavez-Dreyfuss
NEW YORK, March 25 (Reuters) - The dollar fell against the euro in choppy trading on Wednesday after U.S. Treasury Secretary Timothy Geithner said he was open to expanding the use of the International Monetary Fund's special drawing rights.
Investors initially interpreted his remarks as an endorsement of China's proposal on Monday to eventually replace the dollar as the world's reserve currency by the IMF's SDR.
Geithner's comments sent the dollar to session lows against the euro, although it did recoup some of its losses after the Treasury's top official said the greenback would keep its status as the top reserve currency for a long time. For details, see [ID:nN25385009]
"Geithner's comments this morning regarding ... SDRs and the dollar came a bit out of left field," said Dustin Reid, a currency strategist, at RBS Global Banking and Markets in Chicago.
He "suggested he is 'open to changing the weightings and currencies included for the IMF's SDR. Geithner did not say that the world monetary system should move away from using the dollar as the preferred global reserve currency in favor of using SDRs as some initial headlines were suggesting."
In early afternoon trading, the euro was up 0.6 percent against the dollar at $1.3550
China's central bank governor said earlier this week that the world should consider the SDR, a basket of dollars, euros, sterling and yen, as a super-sovereign reserve currency. [ID:nPEK184558]
Geithner, responding to a question at a Council of Foreign Relations event in New York, said he had not read the Chinese proposal but added, "as I understand it, it's a proposal designed to increase the use of the IMF's Special Drawing Rights. I am actually quite open to that suggestion."
Analysts said the initial gyrations in the dollar were a mistake.
Marc Chandler, global head of currency strategy at Brown Brothers Harriman in a note to clients said President Barack Obama's recent comments about the dollar being fundamentally strong and there being no need of another reserve currency, is more of the underlying signal.
Obama said in a prime-time televised news conference on Tuesday: "I don't believe that there's a need for a global currency", and noted that the dollar was "extraordinarily strong right now".
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