Euro hits two-year high against U.S. dollar

Friday, June 21, 2002

FRANKFURT, Germany -- The euro rose to its highest level against the dollar in two years, edging above 96 U.S. cents Thursday as traders dumped the greenback over fears about the growing U.S. trade deficit and wobbly stock market.

The shared European currency closed at 95.92 cents after climbing to 96.45 cents in afternoon European trading, its highest since June 2000, when it hit 96.53 cents.

New figures that showed the U.S. trade deficit at a record $35.9 billion in April helped push the euro up from levels just below 95.60 cents early in the day.

"That was the spike that took it over 96," said Nigel Anderson, a currency strategist at RBS Financial Markets in London.

The rally was motivated more by doubts about the dollar than conviction about the strength of the euro and the economies of the 12 countries that use it, he said.

Anderson said the current euro rally looked more solid than earlier ones, in which the currency moved toward parity -- one euro to the dollar -- only to fizzle out.

A stronger euro makes European vacations more expensive for Americans, but makes it easier for U.S. exporters to compete in Europe.

The euro's rise has also lessened inflationary pressures in Europe, giving the European Central Bank more time to wait before raising interest rates.

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