Euro is becoming the it currency

[Ikutiera]

Euro is becoming the it currency

PARIS — Despite squeals of pain from European exporters, the strength of the euro is fast propelling Europe's single currency into a juggernaut.
Currency traders from Egyptian street hawkers to Asian central banks are looking to the euro as a better store of value as the U.S. dollar erodes. The shared 13-nation currency hit $1.4966 on Friday, another record high against the once steadfast dollar.
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The euro — introduced to financial markets in 1999 and in notes and coins form in 2002 — has risen as a share of global official reserves from 17.9% in 1999 to 25.8% in 2006, according to the International Monetary Fund. In the same period the dollar's share has fallen from 71% to 64.8%.
The dollar's reserve-currency status confers important benefits to the USA — such as being able to borrow in its own currency and making life easier for exporters. Earlier this month Paulson defended the U.S. position.
"The dollar has been the world's reserve currency since World War II and there is a reason," he told Treasury reporters. "We are the biggest economy in the world."
Yet the 13-nation region is catching up with the U.S. Its economy will expand to $12.6 trillion (8.49 euros trillion) next year, only just behind the $14.3 trillion (9.63 euros trillion) U.S. economy, according to IMF estimates.
The dollar has been falling against the euro and other currencies as fears about the health of the U.S. economy have been stoked by the mortgage crisis that has tripped up borrowers and caused a credit crunch among banks.
Fears over the huge U.S. trade deficit, which leaves more dollars in the hands of foreigners, has also weighed on the currency.

Euro is becoming the it currency - USATODAY.com