Business

Euro falls to two-year low against the dollar

  • 12 July 2012
  • From the section Business

The euro has fallen to its lowest level against the dollar for two years on worries over eurozone prospects and as minutes from the US Fed dampened hopes of any new stimulus measures.

The euro fell to $1.2165, its lowest level since mid-2010.

US Fed minutes released on Wednesday from its June meeting suggested it was not planning any imminent additional moves to boost the US economy.

In contrast, the European Central Bank cut interest rates last week.

It cut its key benchmark rate from 1% to 0.75%, a record low for the eurozone, and also cut its deposit rate, from 0.25% to zero.

European stock markets also closed lower, with London's FTSE 100 shedding 1%.

The value of the euro has also been hit by worries over growth prospects for the eurozone and whether it can tackle the current debt crisis.

"Every single central bank except for the Fed is easing, and until that happens we expect the dollar to stay supported," George Saravelos, currency strategist at Deutsche Bank, told the Reuters news agency.

"The euro is likely to weaken further as it will be hurt by the ECB's decision to cut the deposit rate and there will be a shift in funding."