Euro breaches the $1.60 level on continuing dollar weakness (AP) (23-04-2008)

NEW YORK (AP) -- The euro thundered past $1.60 for the first time ever on Tuesday, after a pair of European Central Bank governors said high inflation may cause the bank to raise interest rates. The U.S. dollar also fell against the Japanese yen and the British pound.

The euro rose as high as $1.6018, over a penny above the $1.5916 it was worth late on Monday. The European common currency, which was introduced in 1999, has traded as low as 82 cents. It has surged recently, rising 20 cents against the dollar in just five months and 10 cents in just two months.

The dollar's slump creates an advantage for U.S. companies that rely heavily on exports, but it hurts travel as worldwide inflation rises, air fares climb and prices rise in dollar terms for everything from beer in Munich to fine wine in Paris to gondola rides in Venice.

The dollar has been weighed down by a combination of gloomy U.S. economic data and high European inflation -- fueling expectations that the Fed will cut interest rates yet again while the European Central Bank will leave rates unchanged.

In an attempt to recover their American client base, more and more European manufacturers are investing in manufacturing facilities in the United States.

SourceAP