- The Washington Times - Tuesday, December 31, 2002

FRANKFURT, Germany (AP) The euro hit its highest level against the U.S. dollar in more than three years yesterday, continuing an end-of-the-year rally just ahead of the currency's fourth birthday.
In New York trading, the 12-country currency reached $1.0484 the highest since reaching $1.0486 Nov. 4, 1999; late in the day the euro traded at $1.0482.
The euro is 19 percent higher against the dollar than it was in February, a rally economists say is driven largely by worries about the U.S. economy and stock markets, and a war with Iraq not by any new hope for the sluggish European economy.
Investors getting out of U.S. stocks and bonds must sell dollars to move their money into European holdings, and that helps drive down the dollar's exchange rate.
The euro rise gives a psychological boost for the currency, whose supporters hope it will someday rival the dollar as the favored currency for trade and investment. It was introduced on financial markets Jan. 1, 1999, and the notes and coins were introduced Jan. 1 of this year.
The surge also makes things more expensive for U.S. tourists in Europe but offers U.S. manufacturers an advantage against European competitors, whose goods become more expensive as the euro rises.
Despite that, Germany's finance minister said he was comfortable with the stronger euro, arguing that it demonstrated a rising trust in the continent's economy.
"When the euro was weak in comparison with the dollar, everyone grumbled about the weak currency," Hans Eichel said on Norddeutsche Rundfunk radio.
"It is sitting well in the region of parity" around 1 euro to the dollar.
The euro began life at $1.18, then slid to its all-time low of 82 cents in October, 2000.
Mr. Eichel said the rally demonstrated "that the euro zone, and Germany as the strongest economy in it, are gaining in value in worldwide confidence while the dollar zone is being devalued somewhat. This can't be bad."

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