Euro hits new record high against the dollar - East Valley Tribune: Business

Euro hits new record high against the dollar

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Posted: Tuesday, December 30, 2003 11:45 am | Updated: 1:46 pm, Thu Oct 6, 2011.

FRANKFURT, Germany - The euro kept on rolling against the U.S. dollar on Monday, climbing above $1.25 for the first time in its five-year history.

The 12-country currency rose briefly to $1.2511 in European trading, breaking a previous record of $1.2473 from last week, before slipping back under the $1.25 mark.

The euro, introduced on Jan. 1, 1999, has risen 19 percent against the dollar since the beginning of 2003, and the pace has stepped up sharply since the end of November.

The dollar also hit an 11-year low against the British pound of $1.7767. The euro’s climb has been fueled by concerns about the U.S. trade deficit and was magnified around Christmas by thin holiday trading volume.

The rally has led some economists and government officials in Europe to worry that the stronger currency will hurt a recovery expected to take hold next year. That’s because the stronger euro makes exporters’ goods more expensive compared with those of foreign competitors.

The chief economist for the German Chamber of Commerce and Industry said the stronger euro would hurt exporter profits. ‘‘Every additional cent that must be expended for a euro on the currency markets narrows the profits in the U.S. market and in Asian markets,’’ said economist Axel Nitschke.

The dollar’s fall hurts eurozone producers in Asia as well because many countries there peg their currency to the dollar, meaning those currencies fall against the euro when the dollar does. A spokesman for German Chancellor Gerhard Schroeder said his government wasn’t worried. ‘‘Of course we are following the exchange rate development very attentively, but at the moment I believe there is no cause for any concern, and no cause to consider any measures,’’ said spokesman Thomas Steg.

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