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The European single currency fell as low as $1.1878, its weakest since March 2006, and touched an eight-year low against the Japanese yen, as attempts by Hungary to downplay warnings that it
faced a Greek-style crisis fell on deaf ears. Weaker-than-expected American jobs data continued to unsettle equity investors.
A near-4 per cent drop in Japanese share prices – their biggest one-day fall since March last year – and 2 per cent fall in the Hong Kong index triggered a big sell-off in European markets
amid renewed fears of a double-dip recession. The FTSE 100 Index closed 56.94 points lower at 5069.06.
RBS currency strategist Paul Robson, said concerns for Hungary raised further doubts over the euro area’s ability and desire to deliver austerity measures.
“For Europe, some ‘order’ seems to have been restored over the weekend in Hungary. The trouble is that in many ways you can’t get the genie back in the bottle and the damage has been done,”
he said
He felt the UK’s determination to tackle its budget deficit head on should be positive for sterling, which strengthened by 1 cent to 1.2125 against the euro.
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