Euro reaches record high against dollar

The euro has reached an all time high against the US dollar, climbing above $1.32 for the first time.

The euro has reached an all time high against the US dollar, climbing above $1.32 for the first time.

The euro rose to a new high for a third consecutive day, breaking through yesterday's record of $1.3178 and spiking to $1.3236.

The current dollar slide, driven primarily by concerns over the US trade and budget deficits, has taken the euro from $1.20 about two months ago. It rose above the $1.31 mark for the first time Tuesday.

While a weekend meeting of the finance officials from the Group of 20 industrial and developing countries failed to deliver any signal of concerted action to stem the tide, economists say no specific event is pushing the U.S. currency down this week.

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"It's just anti-dollar sentiment," said Lee Ferridge, chief currency strategist at Rabobank in London. "The trend is continuing."

"I think it should slow before long, but we might see $1.35 before it happens," he added.

Many analysts are predicting the euro could hit $1.40 by the middle of next year, and European Central Bank President Jean-Claude Trichet recently called the rapid increase "brutal."

Still, the ECB has yet to intervene in currency markets in an effort to halt the dollar's fall. Ferridge said that, with the United States unlikely to join in such a move, he didn't expect it to do so.

"I don't think the ECB would go it alone," he said.

The dollar was at its lowest levels against the yen since December 1999 today, buying 102.54 yen.

"The dollar-bearish sentiment, not only against the euro but also other currencies, remains firmly in place," said Mr Minoru Shioiri, senior manager of foreign exchange at Mitsubishi Securities in Tokyo.

Introduced in 1999 as the common currency for 12 European countries, the euro initially dropped against the dollar but has risen some 60 percent since hitting an all-time low of 82 cents in October 2000.

The dollar's current weakness has been helpful to U.S. exports, making American products less expensive overseas, but European leaders have begun to worry openly that it might damage their fragile export-driven economic recovery.

The strong euro puts pressure on manufacturers of products like German luxury cars or French wines. Either their dollar prices will rise or the companies must live with lower profit margins.

A survey published today showed that the euro's strength helped push down German business confidence in November. The closely watched Ifo index fell to 94.1 from 95.3 in October.