The euro has hit a new four year low of 1.1873 against the US dollar with little hope of a rebound, a City expert said.
Phil McHugh, senior executive dealer at foreign exchange (FX) firm Currencies Direct, said: “The recent fears from Hungary, although outside the euro, has heightened the threat of contagion emanating from the eurozone. We have seen CDS [credit default spreads] widen further in Hungary, Spain and Italy – this pushed the value of the euro down to a new low due to heightened fear and risk in the markets.
“The future of the euro has also been called into question, most recently through a survey in the Telegraph which foretells the collapse of the euro within five years. Within a very short space of time the euro has swung from stable to questionable and talk of a euro collapse with countries leaving the single currency is no longer taboo.
“The inception of the euro as a political vehicle has now been surpassed by hard economic realities. Whatever the future for the eurozone, we can be sure that growth and confidence as a whole will suffer in the short term and this will play into a weaker euro,” McHugh added.