NEW YORK — The euro fell to a four-week low against the dollar Wednesday on concerns that Italy could be the next country to be engulfed by Europe’s debt crisis.
Italy’s main borrowing rate jumped above 7 percent Wednesday, indicating investors are unsure of the country’s ability to pay its debt. It also means Italy will be paying billions more in interest. Many economists think the higher borrowing costs are unsustainable.
The euro fell to $1.3540 in late trading Wednesday, from $1.3835 Tuesday. Earlier the euro fell to $1.3521, its lowest point since Oct. 10.
The jump in borrowing costs comes a day after Italian Prime Minister Silvio Berlusconi promised that he would resign once a new budget is passed. Investors believe it will be easier for Italy to pass economic reforms without Berlusconi in office.
Also adding pressure on the euro was uncertainty over who will be Greece’s next leader after Prime Minister George Papandreou resigns. Greek politicians failed to name a new prime minister Wednesday. Talks will continue Thursday.