Euro hits record high against the dollar

Source: Stock Market Digital

Date :21/09/2007 08:55:44

The dollar has broken above $1.41 per Euro for the first time, weakened by the US interest rate cut on Tuesday.

The drop in the dollar's value followed a warning from Federal Reserve chief Ben Bernanke on Thursday that the US housing market crisis might deepen following the cut to 4.75 percent.

Continued climb

The new Euro high is a record since the currency was introduced in 1999.

The $1.40 level has long been seen as a key turning point in solidifying the Euro as a key global currency.

Its continued climb against the dollar is making it a more attractive reserve currency, a position long held by the dollar.

The breach of the key $1.40 level in early European trade sparked a broad-based Euro rally.

The eurozone single currency also rose above 70 pence for the first time in 1-1/2 years.

Export

Analysts have said the impact of the falling dollar on European consumers and businesses may be mixed.

The US is Europe's largest trading partner.

While the strong Euro may cut some import costs, it could also have a negative effect on exports such as oil, metals and many raw material prices which are quoted in dollars.

The fall in the value of the dollar could also spell trouble for growth in Asia with the US being the largest market for exporters.

September 21 2007

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