Euro trades below $1.20, marking new 4-year low against dollar

Euro hits 4-year low below $1.20

BERLIN — The euro dropped below $1.20 for the first time in more than four years on Friday as a Hungarian official’s warning about the state of his country’s economy underlined fears about Europe’s prospects.

The 16-nation currency traded as low as $1.1973 — its weakest level since it bought $1.1920 in March 2006 and well below the $1.2182 it bought in New York late Thursday.

The euro has weakened on worries about Europe’s growth prospects and the effects of government spending cuts being pushed through in the wake of the eurozone debt crisis.

On Friday, Peter Szijjarto, the spokesman for Hungary’s new prime minister, said the country’s economy is in a “grave” situation but the government is ready to avoid a crisis like the one being faced by Greece.

Hungary is a European Union member but doesn’t use the euro. It already received a bailout of euro20 billion bailout from the International Monetary Fund and others in 2008 to help it avoid a default on its loans.

Meanwhile, weak jobs data from the U.S. also contributed to the euro’s slide. They showed that the U.S. payroll grew by 431,000 last month, below expectations and mostly reflecting temporary census hiring by the government. Private payrolls grew at the slowest pace since the start of the year.

Weak U.S. economic data can increase investors’ appetite for safer assets, such as the dollar.

The British pound also fell Friday, dropping to $1.4508 from Thursday’s level of $1.4633.

The dollar was down to 91.85 Japanese yen from 92.68 yen. Earlier Friday, Naoto Kan, previously the finance minister, was named as Japan’s new prime minister.