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Euro breaks through launch level
LONDON, England (CNN) -- The euro broke through its January 1999 launch level against the dollar Friday as pressure mounted for an interest rate cut to ease the impact of a stronger currency on eurozone economy. The euro leapt more than half a cent, pushing through its $1.1747 launch level to $1.1789 -- just below its record high of $1.880. "The trend is very very strong -- you don't want to stand in the way of it at the moment.'' Lee Ferridge, head of global currency strategy at Rabobank, told Reuters. The move marks a psychological milestone for the currency, which struggled to foster market confidence in its infancy and lost a third of its value against the dollar in its first two years. After touching a lifetime low of $0.8225 in October 2000, the euro eventually turned the corner after the European Central Bank and eurozone national central banks joined forces to drive it higher on the foreign exchanges. Its real upturn, however, did not come until early 2002, shortly after the introduction of euro notes and coins across the region at the start of that year. But a strong euro is expected to hurt the struggling eurozone economy as companies find it more expensive to sell goods and services abroad. At the same time, cheap imports are likely to flood the $7 trillion eurozone economy. "There is a growing clamor from all-sides now in the eurozone for the ECB to cut rates and to stop the rot on eurozone export competitiveness," said Steve Barrow, currency economist at Bear Stearns. "Politicians, industry groups and research bodies are all uniting to call on the ECB for policy action." French Finance Minister Francis Mer said Thursday the dollar was becoming too weak against the euro, and he also urged the ECB to cut interest rates to stabilize the exchange rate. "If the ECB had known the growth figures for Germany, Italy and the Netherlands -- all three negative -- before its last meeting, I think it would cut its rates," Mer said. "Now knowing these developments, which are not good for Europe, I think it will know what steps to take." Germany's economy shrank 0.2 percent in the first three months of this year -- and is in a technical recession after growth in the fourth-quarter of 2002 was "minus zero."
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