Euro drops sharply on contagion fears

City A.M. Reporter
THE euro approached a four-year low against the US dollar yesterday on persistent concerns about Europe’s debt woes and after Federal Reserve chairman Ben Bernanke raised concerns over Eurozone bank funding.

Bernanke said swap lines, which were reinstated by the Fed to provide dollar funding to Europe as the Greek fiscal crisis escalated, played an important part in stabilising markets but would not last forever.

In late New York trading, the euro fell 1.6 per cent to $1.2171, after hitting a session low of $1.2166. The euro last week hit its lowest level since April 2006 at $1.2143, and is down about 15 per cent so far this year. The euro could re-test the key $1.2135 long-term support level in the next few days, warned BNP Paribas.