Euro hits four-year low

The euro dropped to its lowest point against the dollar in four years on Monday over mounting concerns about eurozone debt. Meanwhile the German government is preparing to propose major reforms to budget laws across Europe.

Reuters

Despite a billion euro rescue package for Greece by the European Union and the International Monetary Fund, there are still fears that the single currency is at risk of collapse. 

The euro hit 1.2 dollars in trading in Tokyo against 1.3 dollars in New York on Friday.

The joint EU-IMF package was designed to prevent the Greek crisis from spreading to other weak eurozone countries.

But the move has failed to reassure markets. Asian markets tumbled on Monday with Shanghai down five percent to reach its lowest level in more than a year. 

Tokyo fell over two percent, Hong Kong, 2.14 per cent and Sydney slumped 3.12 per cent.

In Europe, stock markets in London, Paris, Frankfurt and Madrid all climbed slightly. But Spain, Portugal, Italy and France have all announced austerity measures.

On Sunday, IMF chief Dominique Strauss Khan on Sunday said that European markets had taken too long to respond to the Greek crisis.

Meanwhile, the German finance ministry says it will present proposals to tighten European fiscal rules on Friday.

The Financial Times reports that the German government plans to press other eurozone countries to adopt their own versions of Berlin’s budget laws.

Germany last year introduced a law prohibiting the government from running a deficit of more than 0.35 per cent of GDP by 2016. German states will not be allowed to run any deficit after 2020.