Euro hits new high against dollar

Europe’s single currency the euro soared to a new high against the US dollar on Thursday, putting increasing pressure on Germany’s export-led economy.

Continuing on its seemingly unstoppable climb against the greenback, the euro broke through the $1.56 for the first time ever early on Thursday. The euro has gained 15 percent versus the dollar since last summer, fuelled by the US subprime lending crisis and failing US interest rates as the American economy has slowed.

German exporters, which drive the world’s third-largest economy, have begun expressing concerns that the euro’s strength could hurt their ability to sell abroad.

“The exchange rate is increasingly making doing business more difficult and it isn’t helping us at all with exports to the dollar region,” said Matthias Wissmann, the president of the VDA auto industry association.

However, a strong euro shields Germany from inflationary pressures caused by high oil prices, because petroleum products are sold in US dollars.