The dollar extended its slide against the world's other major currencies Friday on expectations that the Federal Reserve will keep interest rates low to nourish U.S. economic growth despite rising oil and food prices.
Central banks overseas are increasing interest rates to fend off inflation, making their currencies more attractive to investors seeking higher yields.
But Fed Chairman Ben Bernanke has said rising commodity prices will have only a temporary effect on broader inflation in the U.S. So investors expect the key U.S. rate to stay near zero to help fuel domestic economic growth while millions are out of work.
The government said Thursday that economic growth in the first three months of the year slowed to an annual pace of 1.8 percent from 3.1 percent at the end of 2010.
The euro was worth $1.4839 late Friday, up from Thursday's rate of $1.4821.
The euro has barreled up more than 4 percent just in April, and is up 9.5 percent this year despite ongoing concerns about high debt levels and stagnant economies in some of its member countries. Expectations that the ECB will keep lifting rates as prices rise are boosting the euro.
The EU said Friday that inflation in the 17 euro countries rose to 2.8 percent in April from 2.7 percent last month.
The euro peaked at $1.4881 late Thursday, its highest level since December 2009.
The dollar is losing ground against currencies all over the world, reflecting worries about the growing budget deficit in the U.S., said Bank of America Merrill Lynch foreign exchange strategist David Woo in a research note.
The British pound is trading just shy of its highest levels since November 2009, while the Canadian dollar on Thursday hit its strongest point since November 2007. The Australian dollar hit a more than 27-year high and the Swiss franc notched a fresh record against the dollar Friday.
Despite the dollar's 8 percent decline this year against a group of six currencies, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner have both said this week that the U.S. supports a "strong dollar" policy. Bernanke on Wednesday said that the Fed, by keeping a watch on inflation and taking steps to reinvigorate the economy, was helping support the dollar.
But the dollar's broad drop suggests that U.S. consumers will have to pay more for imported goods from all over the world, particularly oil. Prices for crude rose to about $113 a barrel Friday. Analysts say retail gas prices could reach a nationwide average of $4 a gallon by early May.
The government said Friday that personal incomes rose 0.5 percent and consumer spending rose 0.6 percent last month, but most of the increase was spent on gas.
Many economists say the dollar's decline has also helped contribute to the boom in commodity prices, which are bought and sold in dollars. Shoppers will have to pay more as consumer-goods companies raise prices, citing soaring costs of raw materials.
However, a weak dollar can be a boon for U.S. manufacturers because it increases demand overseas from people who can buy U.S.-made goods more cheaply in their home currencies.
Currencies in developing economies are also climbing. China's central bank on Friday set the yuan's exchange rate at 6.49 to the U.S. dollar _ its highest official level since a currency revaluation in 2005. China's leaders are speeding up the yuan's rise to tame inflation, a step U.S. officials have pushed for years to help repair the massive trade deficit with China. A stronger yuan would make Chinese exports more expensive and make U.S. exports more competitive.
In other trading Friday, the British pound rose to $1.6711 from $1.6643. The dollar fell to 81.10 Japanese yen from 81.57 yen, dropped to 94.60 Canadian cents from 95.12 Canadian cents and slid to 0.8639 Swiss franc from 0.8732 Swiss franc.