Euro Drops Again

Considering the further downgrade of Spain that occurred last week, the fact that the Euro has once again dropped isn't much of a surprise. What seems to be occuring is that people are catching on to the fact that printing up trillions in currency can be only so effective when your societies are generating only a modest amount of actual wealth

June 1 (Bloomberg) -- The euro extended its longest monthly decline versus the dollar in 10 years amid concern mounting writedowns at Europe’s banks and efforts to reduce budget deficits will hamper the region’s economic recovery.

The 16-nation currency fell before a report forecast to show Italy’s unemployment rose and after an index of executive and consumer sentiment tumbled. The European Central Bank warned yesterday of more bank losses as the credit crisis spreads. Australia’s dollar weakened after its central bank kept borrowing costs unchanged and amid concern slowing manufacturing growth in China will temper export demand.

“There are some complications in the euro area which have stopped us from jumping in until the euro gets closer to what we see as a fair value,” said Gareth Fielding, chief investment strategist at Zug, Switzerland-based Quantum Global Wealth Management, which oversees $2.5 billion for sovereign-wealth funds and central banks. “Although we are still convinced that, on a longer-term basis, the euro is very good value, it’s difficult to buy at the moment given market sentiment is very negative.”

Will the Euro survive is much better question then wether it will be a great long term investment.