Euro value soars, dollar reaches record low

28.05.03 @ 09:57

  1. By Sharon Spiteri

The euro has reached record highs against the dollar yesterday with a value of $1.1933. It surpassed the previous record of $1.1885 reached on the day of the euro's launch in January 1999.

The rise was caused by demand for eurozone government bonds and a lack of objection to the euro's rise by the European Central Bank, a halt to trading in the US for Memorial Day also helped.

The euro has also been underpinned by recent signs that the US government may be relaxing its traditional commitment to a strong dollar in an effort at kick-starting an export-led recovery

Although the euro's rise has been checked slightly by reports that the ECB may be preparing the ground for an interest rate cut, analysts said similar action by the US Federal Reserve could leave the long-term situation unchanged.

Yet, a strong euro also has its disadvantages to the 12 countries in the eurozone, Corriere della Sera says. Although it would mean a cheaper holiday to New York, it also means high costs for companies exporting out of the EU.

The euro is also strong against other major currencies such as the Pound and the Yen although the UK currency seemed to rebound yesterday.

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