Euro Slump

The euro has slumped to a four year low of 1.2051 against the dollar and its worst against the pound since December 2008 when sterling came within spitting distance of reaching 1.21 against the beleaguered single currency.

It's the same old story for the euro, concerns over the magnitude of sovereign-debt. China said last week that it was reviewing the euro portion in its mountain of foreign exchange reserves as the currency continues to fall.

It's ironic that it was only a year ago that China was expressing it's dissatisfaction with it's exposure to the then declining US dollar. Now it's ditching the euro in favour of the US currency.

Chinese exporters are said to becoming increasingly reluctant to accept the euro in settlement of foreign trade.

Figures from the ECB say that Eurozone banks are depositing record amounts of cash in the ECB's overnight facility. That is being taken as a sign that they are happier having it sitting on deposit than lending it out to business.

One euro was worth 1.4287 at the close of 2009, it has subsequently fallen more than 15% from that level and we are less than halfway through the year.