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Dollar again hits low against euro

Close is $1.3548 in light trading

BERLIN -- The US dollar reached a record low yesterday against the euro, which hit $1.3548 in extremely light holiday trading with most European foreign exchange markets closed.

Analysts expect the euro to end the year at about the $1.35 level -- which the euro broke for the first time Thursday -- but with activity so thin, small trades can send the currencies careening because there aren't enough other trades to offset the effect.

The dollar was quoted at $1.3519 per euro in late trading in New York.

The 12-nation euro initially fell against the dollar after its 1999 debut, but it has risen more than 60 percent since October 2000.

It has risen particularly sharply since September, when it traded for around $1.20, over persistent concerns about the US trade and budget deficits. Analysts expect the course to continue and some have predicted a euro level of $1.40 or higher by the end of 2005.

Though Washington professes a "strong dollar" policy, most analysts believe the United States is content to let the dollar fall because it has been making American exports cheaper.

However, Europe's fragile economic recovery is export-driven, and the strong euro has either been making European goods more expensive overseas or cutting into producers' profits as they try to hold prices steady.

At the same time, though, it has helped mitigate high oil prices for Europeans because oil is priced in dollars.

European Central Bank president Jean-Claude Trichet has called the rapid increase in the euro's strength both "unwelcome" and "brutal" but has made no indication he will intervene in currency markets to halt the dollar's slide.

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