updated 10/21/2009 7:25:12 PM ET 2009-10-21T23:25:12

The euro broke through $1.50 against the dollar for the first time in 14 months Wednesday as a recovering stock market further sapped the U.S. currency's appeal as a safe-haven investment.

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The dollar's slide came despite recent supportive comments from Treasury Secretary Timothy Geithner and senior European finance officials, who are growing increasingly anxious about the euro's appreciation. A stronger euro makes European exports more expensive in other currencies, and thus less competitive.

The 16-nation euro peaked at $1.5046 in New York, up from $1.4928 late Tuesday. That's the euro's strongest level since August 2008, when it traded above $1.56.

"It is a really important psychological level that has been broken," said Matthew Strauss, senior currency strategist at RBC Capital in Toronto.

The dollar also dropped sharply against currencies that are big commodity exporters, such as the New Zealand and Australian dollars.

Rock-bottom low U.S. interest rates have also been keeping the dollar down as the Federal Reserve injects huge amounts of money into the financial system in an effort to encourage borrowing.

European rates are slightly higher, providing currency traders a better return on euro holdings. Analysts believe that gap could widen if, as many expect, the European Central Bank moves before the Fed does to raise short-term interest rates.

Improving earnings from major U.S. companies sent stocks higher, putting downward pressure on the dollar as well as Treasurys, which are also seen as safe-haven investments. The Standard & Poor's 500 index rose about 0.5 percent in afternoon trading as several banks and technology companies reported stronger results.

Video: The Greenback Gamble Since the financial crisis hit last year, investors have treated the dollar as a low-risk, safe place to park funds. But the dollar has weakened since then as stocks have recovered, sending the euro, British pound and Japanese yen higher versus the dollar.

The dollar also tends to fall as foreign exchange traders become more confident about buying up stocks in emerging markets or foreign bonds, which yield higher returns than U.S. government debt because interest rates in those countries are so much higher.

Even as Geithner has voiced support for a strong dollar policy, the U.S. government is still pumping cash into the economy and keeping interest rates at their extremely low rates near zero, factors which tend to keep the dollar weak.

"There is, I think, a correct perception that the U.S. administration and the Fed are not overly concerned as long as there's an orderly decline in the U.S. dollar," Strauss said.

Other countries are also growing increasingly wary of their currencies' gains against the dollar. On Wednesday, a senior Russian government official warned that the rapid strengthening of the ruble could undermine the country's economic recovery, according to news reports.

On Monday, the Brazilian government imposed a 2 percent tax on foreign purchases of Brazilian bonds and stocks, partly to contain the strengthening real. The dollar has dropped more than 40 percent this year against the real. Since Monday, it fell another 1 percent.

The British pound, meanwhile, jumped to $1.6606 from $1.6359 as minutes from a Bank of England meeting earlier this month showed that policy makers saw improvements in the economy and acted in unison not to expand its asset-purchase program.

A Bank of England official, Mervyn King, also hinted in an opinion piece in a Scottish newspaper that Britons should look for higher interest rates "at some point." The 0.5 percent key British rate is only slightly higher the than U.S. federal funds rate at a range near zero.

Lower interest rates tend to weigh down a currency as investors transfer funds into higher-yielding assets.

In other New York trading, the dollar dropped as low as 1.0040 Swiss francs, its weakest point since July 2008. It was worth 1.0129 francs late Tuesday. The dollar also fell to 1.0389 Canadian dollars from 1.0505.

The greenback hit a 15-month low against the New Zealand dollar and a 14-month low against the Australian dollar. Australia recently raised interest rates, the first of the major economies to do so.

The dollar edged up to 90.90 Japanese yen from 90.74 yen late Tuesday.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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