WASHINGTON — Hitting a 14-month low against the euro, the sinking dollar renewed concerns yesterday about higher oil prices and other inflationary threats.

A lower dollar can help U.S. manufacturers by making their exports cheaper for foreigners to buy. It also benefits factories in China, which pegs its currency to the dollar. But a weakening dollar hurts European businesses because their goods become relatively more expensive.

Since early March, when the dollar hit a high for the year against the euro and other major currencies, it has declined about 12 percent against a basket of major currencies.

The dollar's value against the euro yesterday fell below the psychological barrier of $1.50. In response, oil prices jumped to a new high for the year, settling at $81.37 a barrel, before falling back below $81 in Asian trading.

Crude oil is priced in dollars. So when the dollar falls, oil producers demand a higher dollar price to make up for the lost purchasing power relative to other currencies, such as the Japanese yen or the euro. Oil, which was trading below $70 a barrel in early October, has been rising steadily as the dollar has fallen.

The euro, the common currency of 16 European nations, peaked yesterday at its highest level since August 2008. One euro cost $1.5046, up from $1.4928 in late trading Tuesday.

Many analysts saw the euro's movement above $1.50 as a milestone that could put further pressure on the greenback. The dollar also continued falling against some other currencies, dropping against the British pound, the Canadian dollar and falling to the lowest levels in more than a year against the Swiss franc and the Australian dollar.

The fall in the dollar is occurring as the federal government's budget deficit hit $1.42 trillion in the fiscal year ended Sept. 30.

The administration worries that a falling dollar could spook foreign investors, including the Chinese — the largest foreign holder of Treasury securities — into dumping their dollar-denominated assets. That could further hurt the dollar, push interest rates up and depress stock prices..