The euro hit parity with the U.S. dollar Monday, rising to an exchange rate of $1.0015 -- its highest value since February 2000 and a psychological boost for the three-year-old shared currency.
The euro was trading around 99.3 cents earlier in the day after hovering near one-to-one for weeks. It has now risen 15 percent since beginning its rally in early April.
The euro, which first entered use in January 1999, last was level with the dollar on Feb. 24, 2000. Economists say the euro's rise is more the result of worries about the dollar and U.S. stocks than new conviction about the strength of the economy in the 12 countries that use the euro.
The dollar's weakness is a mixed blessing for the United States, the world's biggest economy. It means costlier European vacations for Americans, but eases price disadvantages for U.S. manufacturing exporters, who have complained about the strong dollar for months.
The strong euro also relieves inflationary pressure in Europe by making imported goods and energy cheaper.
The decline of U.S. stocks and a series of scandals about the trustworthiness of earnings reports are a major force driving the dollar down, according to economists.
Foreign investors' eagerness to buy U.S. stocks during the boom of the late 1990s was one of the things that kept the dollar high against foreign currencies, because investors need dollars to purchase U.S. investments.
For years, that was enough to offset the huge U.S. current account deficit, the broadest measure of foreign trade, running at $417 billion last year and showing no sign of abating this year. When Americans buy more from overseas than they can sell, that puts downward pressure on the dollar.
The euro has risen from about 87 cents in early April. It hit its all-time high shortly after its launch on Jan. 1, 1999, but then began to slide, falling through the $1 mark in February 2000 and hitting a record low of 82.30 cents in October 2000.
Since then, the euro has staged several tentative rallies, but they had always fizzled.
The euro's supporters had hoped the new currency would challenge the dollar as the favored currency of investors and central bankers, and parity could give them a public relations boost.
Economists caution that despite euro's rally, there is little encouraging economic news from the 12 countries using the shared money. Growth in the euro zone was an anemic 0.2 percent in the second quarter, though most economists predict a pickup in the second half of this year.