Euro Falls against Dollar, Asian Markets Retreat

17/05/2010 The European unified currency is facing more risks as it has fallen to four-year low against the dollar, after being hit by renewed fears over the strength of the Eurozone country and as the global stock markets mostly retreated on Monday, with the heaviest falls in Asia .

Despite the huge sums of money pledged in support for Eurozone countries, the Euro fell to $1.2237, while one pound was worth 1.1702 Euros. Thus, severe austerity measures are needed to cut budget deficits and debt.
This is affecting the value of the euro as analysts worry the cuts will hold back economic growth in the Eurozone.

Asian equity markets tumbled on Monday, with Shanghai diving five percent to reach the lowest level in more than a year. Tokyo fell 2.17 percent, hitting an 11-week low, Hong Kong shed 2.14 percent and Sydney slumped 3.12 percent.
The picture was brighter in Europe, with London managing to rise 0.44 percent and Frankfurt up 0.16 percent in morning trade, although Paris fell 0.45 percent.

This situation is affecting the value of the euro as analysts worry the cuts will hold back economic growth in the Eurozone.
John Kyriakopoulos, from the National Australia Bank in Sydney, said: “Concerns that severe fiscal austerity in the eurozone will crush growth in the region continues to weigh (on the euro).”

The debt crisis began when Greece teetered towards default triggering fears that other weak Eurozone economies such as Portugal, Spain and Italy may be next.
Athens is now paying a painful price for its past overspending with the government forced to slash civil servant pay and pensions while raising taxes as a condition for a 110-billion-euro EU-IMF bailout.

The IMF and EU agreed the Greek bailout only at the beginning of May, and a week later were forced to put together a trillion-dollar –750 bn euro- a rescue plan to the unified currency as investors continued to dump the currency and European shares.

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