| 13.4°C Dublin

Euro hits four-year low

THE EURO has slumped to a four-year low against the dollar as investors dump the single currency on sovereign debt worries.

In late morning trade in Tokyo the euro fell to $1.2234 against the greenback, which is its lowest level since April 2006.

This latest slump comes despite the massive €750bn emergency funding plan agreed recently by eurozone leaders, in tandem with the ECB (European Central Bank) and the IMF (International Monetary Fund).

"People have no idea what it will take to get out of this situation as they have seen euro plunge despite a massive rescue package," said Minoru Shioiri of Mitsubishi UFJ Morgan Stanley Securities.

"There are very big concerns about the eurozone."

German Chancellor Angela Merkel yesterday said the €750bn rescue fund only bought time to bridge the gap between the eurozone's strongest and weakest economies.

ECB president Jean-Claude Trichet said there was a need for a leap in governance in the euro area to prevent bad behaviour among member states.

Last week the currency had briefly rallied towards $1.31 after the rescue package was announced before worries about the eurozone's growth outlook came back into focus.

Traders fear that the austerity measures announced by Greece, Spain and Portugal would hurt growth in the near term.