EU pessimism hits euro’s value

Worries about a lack of a solution to the eurozone sovereign debt crisis caused the euro to take a pounding on the foreign exchanges on Wednesday.

It slumped in value against the dollar and the British pound falling to an 11-month low against the US currency.

Traders said the euro looks set to remain weak through the end of the year.

At one stage on Wednesday it fell as low as $1.2944. Its highest point in the year was at the end of August when one euro was worth a fraction over $1.45.

Analyst Oliver Roth from Close Brothers Seydler explained the factors behind the sell off: “The EU meeting decisions are far (reaching) enough in the middle and long term. But in the short term, we still have the problem of refinancing of the countries in the southern part of Europe. So we need the help of the central bank.”

Analysts predict the euro will come under further pressure if more euro zone nations have their credit ratings cut.

The worst effect would come from a downgrade to France’s triple-A status.

Copyright © 2013 euronews