LONDON (ShareCast) - The euro tumbled to a three-month low against the dollar on Monday as markets took fright at controversial plans to put a one-time tax levy on bank accounts in Cyprus to pay for the country's bailout.
The single currency changed hands at a low of $1.2880 before later recovering to $1.2954, almost 1% down on the day.
The European Union and International Monetary Fund's plans to put a one-time tax levy on bank accounts to pay for the €10bn bailout plan sparked fears that the Eurozone's bigger economies such as Spain and Italy may follow suit.
ECB member Jörg Asmussen managed to sooth concern about contagion, saying Cyprus' situation was unique. However renewed worries about the European debt crisis weighed heavily on the euro and sent stock markets across the globe tumbling.
Against the yen, the euro was down 0.9% to ¥123.46 while the dollar traded lower at ¥93.45.
The dollar index, which measures the US currency against a basket of six others, rose 0.5% to 82.645 amid increased safe haven flows.
The euro fell 0.9% against the British pound to 85.73p.