The euro traded near four-year lows Mon-day amid warnings from European leaders that their $1 trillion loan backstop for troubled governments wo-uld not be enough to defuse the continent’s crisis over high levels of government debt.
The euro was trading 0.1 per cent lower on the day at $1.2334 as finance ministers from the EU gather in Brussels to try to restore confidence that the 16 co-untries that use the currency were ready to take the tough measures needed to reduce their debt burdens.
Earlier euro had fallen to $1.2237 — its lowest since April 2006. The shared currency has now fallen a staggering 12 per cent over the past week in spite of the massive euro750 billion “shock and awe” financial rescue package unveiled last weekend from the EU, together with the Internati-onal Monetary Fund. The slide comes as Europe’s le-aders are saying that the lo-an backstop by itself isn’t enough and that governme-nts must take drastic steps to get debt under control — and shore up the fundamental rules that govern their 11-year-old currency by preventing governments from spending their way into trouble and needing a bailout like the one just given Greece. Such rules exist but have been widely ignored and officials are looking at toughening them.
The German Chancellor, Ms Angela Merkel, conceded that package was no mo-re than a band-aid solution to the problems afflicting eurozone countries. — AP