The euro surged to a new high in trading on Wednesday when Frankfurt exchanges quoted a rate of 1.3024 dollars. The rate smashed the previous record of 1.3005 dollars on November 10. The euro had begun trading Wednesday with markets quoting 1.2977 dollars or 77.02 euro-cents per dollar. On Tuesday the euro's reference pegging by the European Central Bank was 1.2971 dollars. Analysts said the dollar was expected to remain under pressure due to the massive budget and current accounts deficits in the U.S. economy. In the second quarter this year, the U.S. current account deficit hit a record 166.2 billion dollars, or 5.7 per cent of the overall economy. To finance the deficits, the U.S. needs fresh foreign capital of 1.8 billion dollars a day. The dollar had gotten some respite after the U.S. Federal Reserve last week raised its benchmark overnight lending rate by a further one-quarter point to 2.0 per cent in the fourth such rate hike this year, while indicating that further rate hikes would be forthcoming. The record surge for the euro comes while U.S. Treasury Secretary John Snow is touring Europe with the message that Washington supports a "strong dollar" while arguing that European economies need to pick up the pace of growth. In a speech in London on Tuesday, Snow rejected suggestions that the Bush administration is permitting a softer dollar in order to help boost the competitiveness of U.S. exports. "Our policy is for a strong dollar," he said. The dollar has lost over 9 per cent against the euro over the past year.
