The euro surged to a two-year high against the US dollar on Friday as the greenback was buffeted by worries about weakening growth and a persistently high trade deficit as global finance leaders met in Washington.
The euro stood at US$1.3532 at 9pm GMT, compared with US$1.3480 dollars in New York late on Thursday, hitting its highest point since January 2005.
The euro approached its all-time high of US$1.3666 hit on Dec. 30, 2004 and also set an all-time record at ¥161.42. The euro later dipped to ¥161.32 from ¥160.62 a day earlier.
The US dollar meanwhile edged up to 119.22 yen compared with 119.14 late on Thursday.
The greenback rose against the New Taiwan dollar in Taipei yesterday, moving up NT$0.005 to close at NT$33.106. A total of US$253 million changed hands during the day's trading.
The US dollar opened at NT$33.101 and fluctuated between NT$33.1 and NT$33.12.
Analysts said that questions about global imbalances suggest the G7 leaders are content to see a weaker dollar as a means to alleviate these worries.
"The US dollar remains in the realm of the trader hell with torture being applied from a potential trade war, potential economic slowdown, and potential G7 action on carry trades," Andrew Busch at BMO Capital Markets said.
"There are major arguments made among the economic elite over whether the US dollar should have a continuous devaluation to help the country erase its enormous trade/current account deficit. A weaker greenback would improve the competitive footing of US exporters and make US imports more expensive," he said.
The US dollar got little relief from a better-than-expected report on the US trade deficit.
The deficit fell slightly to US$58.4 billion in February from US$58.9 billion in January, the US Commerce Department reported. The figure was a bit better than the average analyst estimate of a deficit of US$60.5 billion.
Robert Brusca of FAO Economics said that despite the improvement in the deficit, US exports failed to pick up. The narrowing came from a drop in both imports and exports.
"We must therefore conclude that the weakness in US exports reflects weakness abroad," Brusca said.
The dollar has also been depressed since European Central Bank chief Jean-Claude signalled that it was ready to raise eurozone borrowing costs again in June.
Trichet sent a clear signal that the bank was set to raise its key interest rates -- already at a five-and-a-half-year high -- still further in June, after holding rates at 3.75 percent on Thursday.
"Characterizing monetary policy as still accommodative, he [Trichet] underpinned the expectation of another 0.25 point increase in the refinancing rate in the eurozone before mid-year," said Paul Chertkow, head of global currency research at The Bank of Tokyo-Mitsubishi in London.
The euro has been buoyed in recent weeks by favorable interest rate differentials, analysts said.
In late New York trading, the US dollar stood at 1.2144 Swiss francs from SF1.2167 on Thursday.
The British pound fetched US$1.9866 after US$1.9785.
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