MercoPress. South Atlantic News Agency

New record low for the US dollar against the Euro.

The US dollar dropped Wednesday to a new record low breaking the 1,30 benchmark with no immediate prospects of a rebound according to European analysts who fear US trade and fiscal imbalances and have doubts about the strength of the economy's recovery.

In spite of a 3,7% drop in the September US trade deficit, for the fourth month running the trade deficit has been above 50 billion US dollars and prospects of a continued budget deficit under the re-elected Bush administration have made the Euro gain a full ten cents against the US dollar in a month.

Besides events in Iraq and the Middle East conflict, closely linked to oil supplies, have also added fuel to the volatile currencies markets.

The US currency has been weakening for much of the past year pressured by the awesome 427 billion US dollars budget deficit.

But a strong Euro has also raised doubts in Europe where exporters fear that a weak US dollar will debilitate their competitiveness edge.

Last week European Central Bank president Jean Claud Trichet expressed concern about the situation highlighting that the rise of the value of the Euro was "brutal".

"Excess volatility and disorderly movements in exchange rates are undesirable for economic growth", stressed Mr. Trichet recalling that this was the position unanimously agreed last February in Florida by G 7 members.

The European economy is also standing on swampy ground because much of its still slow recovery is based on exports given the sluggish domestic demand.