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. Last Updated: 07/27/2016

Euro Surges Past $1.18, Close to a Record High

FRANKFURT, Germany -- The euro surged above $1.18 Friday, coming within a penny of its all-time high against the dollar in a rapid climb fed by signals that U.S. officials welcome a weaker currency to spur exports.

The 12-country currency hit $1.1807 in morning trading in Europe, then surged to $1.1818 in the late afternoon.

The euro is now flirting with its all-time high of $1.1884, reached on Jan. 4, 1999, three days after it began trading on financial markets.

Economists said the euro's rise Friday was caused less by any breaking news than by the same factors that have made it go up in recent days -- chief among them a perception on financial markets that the United States is perfectly happy to see the dollar go down.

"I haven't seen any news that explains why it's up ... it's just the ongoing factors that are pushing it in that direction," said economist Julian von Landesberger at HVB Group in Munich.

Karsten Fritsch, a currency analyst at Commerzbank in Frankfurt, said some dollar selling early Friday appeared triggered by orders to sell if the dollar fell past a certain point -- so-called "stop-loss orders." Those kicked in as the euro cruised past $1.1750, he said.

Ongoing factors weighing on the dollar include comments in the past two weeks by U.S. Treasury Secretary John Snow suggesting Washington will not act to slow the U.S. currency's fall. A weaker dollar helps U.S. exporters and therefore could help the economy grow.

Snow's remarks accelerated a 16-month dollar slide caused by investor disenchantment with the prospects for the U.S. economy and stock market. When investors move out of U.S. assets, they must sell dollars, pushing its exchange rate down.

Higher short- and long-term interest rates in Europe have attracted money pulled out of U.S. stocks, strengthening the euro -- although economists say the currency's rise does not mean people are optimistic about the European economy.

On the contrary, many economists and government officials fear the euro's rise could stall Europe's economy just as it begins to move out of a period of sluggish growth -- 0.8 percent last year, and zero growth in the first quarter. A stronger euro hurts European exporters by making their goods more expensive compared to those of foreign competitors.

The euro has now recovered its losses from a long slump against the dollar that saw it as low as 82 U.S. cents. Its rally has helped restore some luster to the European Union's shared-currency project.