- The Washington Times - Friday, December 5, 2003

FRANKFURT, Germany (AP) — The surging euro set a record high against the dollar yesterday for the sixth day in a row, hitting $1.217 as the shared European currency extended a sharp rally that has seen it rise more than 15 percent against the greenback this year.

The euro passed the old record of $1.216 from Thursday after weaker-than-expected U.S. jobs data led to more dollar selling. It was the sixth straight business-day trading session in which a new high was reached, going back to Nov. 28.

In late New York trading, the euro was quoted at $1.2166, up from $1.2086 late Thursday and barely easing off its new record.

The dollar also fell to a three-year low against the yen at 107.57. In late New York trading, the dollar was quoted at 107.65 yen, down from 108.15 yen late Thursday.

“For the last several weeks, the Bank of Japan was defending the 108 level for the yen,” said Michael Woolfolk, senior currency strategist at the Bank of New York. “It was using it as a line in the sand, but with the nonfarm payroll results showing that we have added fewer jobs than expected, the dollar sold off across the board.”

The dollar also reached its lowest point since 1998 against the Swiss franc at 1.2758 francs, and slipped against the British pound and the Canadian dollar.

The dollar has sagged on fears about the U.S. trade and budget deficits, factors that can undermine a country’s currency. Worries over terrorism and the U.S. presence in Iraq also have played a role.

The dollar’s decline helps U.S. exporters by making their goods cheaper against foreign competition. But some fear the flip side — a stronger euro — could hurt a fledgling economic recovery in Europe.

The United States needs foreigners to buy U.S. assets such as stocks and bonds to offset the effects of the budget and trade deficits on the dollar. Bad economic news can discourage investment and therefore push the currency down.

The dollar’s fall has taken on a momentum of its own, however, as even positive data such as the 8.2 percent growth rate for the third quarter has failed to stem the slide.

The euro’s climb has been so rapid — more than 5 percent in the past month — that some observers think it soon may tempt the European Central Bank to intervene to slow the currency’s movement, for instance by selling euro reserves.

U.S. Treasury Secretary John Snow has declined to say whether the United States would intervene in an attempt to slow the dollar’s fall. The administration says it has a strong dollar policy, but many observers think it is not unhappy over the decline because it could help exporters and therefore spur growth.


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