Euro Slides Again on Dutch Rejection of European Union Constitution

The once-robust euro was slammed anew Wednesday after Dutch voters rejected the European Union constitution and fresh economic data suggested a deteriorating outlook for the Continent.

The euro slumped to $1.221 in New York from $1.231 on Tuesday. The currency hasn’t been this weak against the dollar since September, although it is well above its record low of about 83 cents in 2000.

An index of manufacturing activity in the euro region fell to 48.7 in May from 49.2 in April, according to NTC Research Ltd. Any reading below 50 indicates activity is contracting.

“The indications are that what we are seeing is an increasingly entrenched downturn, as opposed to a temporary blip,” said Chris Williamson, chief economist at NTC Research.

“There’s very little reason to be buying the euro at the moment,” said Paul Robson, a currency strategist at Royal Bank of Scotland Group in London. “Growth remains very sluggish in the euro zone, and that’s not going to change anytime soon.”

The “no” votes on the European Constitution, first by French voters Sunday and by Dutch voters Wednesday, are deepening concerns about the potential for further integration of the euro-zone economy.

The rejections suggest that “Europe is on a slippery slope toward disintegration and instability,” said Joachim Fels, chief fixed-income economist at Morgan Stanley. “Increasing political and economic divergences imply that somewhere down the road it might all blow up. I’m not saying it should or will, but the risk of a euro wreckage has risen significantly.”

For Americans, the weaker euro means that vacationing in Europe is getting cheaper. The decline also might lower the cost of European exports.

But U.S. investors are losing money in European stocks as the currency’s slide devalues those shares.