The main culprit was undoubtedly the currency's chief protector, Mr Wim Duisenberg, president of the European Central Bank and the chief guardian of the euro.

The sell-off was triggered by an interview with the London Times during which Mr Duisenberg was asked if central banks should intervene in the market if a war in the Middle East caused a sharp change in currencies. "I wouldn't think so," he replied.

These four words managed to undo all the good which the G7 intervention of September 22nd had done. Intervention had put a halt to the euro's slide and appeared to give it a floor above $0.96.

Mr Duisenberg's slip signalled that the big central banks in the United States and Japan may have gone cool on the idea. Feeling safe in this knowledge, traders proceeded to sell the currency again as if it were a one-way bet.

Why are the markets so ready to sell?

Almost since its inception the markets have sold the euro. It has got to the stage that it is almost impossible to lose money by selling. The converse is that those who buy the currency and hang on to it lose.

There are many reasons given for this. First is the continued economic growth in the US. Even as Europe picks up the United States grows faster and without much inflation.

It has proved such a good place to invest that many are reluctant to try anywhere else. This may change next year if European growth continues to pick up and US growth falls off. But that has been forecast before and the US economy has surprised. There is every chance it will happen again.

Capital flows are also very much in the dollar's favour with billions flowing out of Europe to invest not only in the US stock market but also in US companies. This too could change if US firms began buying up European companies, perhaps smelling a bargain with the currency at such a low level.

Many investors also blame the ECB and that was even before Mr Duisenberg's gaffe. They say its message is not clear and that the ECB is overly concerned about inflation to the extent that it will not allow growth to take off.

Europe's politicians are responsible also to some extent. Many have commented on the state of the currency to an extent that would not be countenanced in Washington.

Just last month German Chancellor Mr Gerhard Schroder said the weak currency was good news for Germany as it allowed exporters to compete more effectively and thus boosted growth. It may be true but many felt he could have had the decency not to say it so bluntly.

What are the effects?

The weak euro makes companies very competitive when competing against those outside the euro zone, particularly in the US or Britain, and thus boosts exports. This is very good for growth and hence is good news for Germany but not for the Republic, which is growing rapidly already. The problem is that if the fortunes of the euro turn around too quickly, these companies could find themselves outflanked by leaner hungrier firms in Britain.

The other problem is the actual volatility of the currency. If it was weak but stayed around the same level, firms could at least make decisions and buy the currency. Its continuing decline leads to massive uncertainty, something no firm or enterprise welcomes.

Does it really matter to us in Ireland?

Yes, it accelerates growth by increasing exports. It also makes imports more expensive, particularly those from the US and the UK, our two biggest markets. That leads to increased inflation and is one of the main reasons why inflation is now running at 6.2 per cent.

If we didn't have the euro would this have happened anyway?

If the euro had not yet happened, the pound would probably be trading between the deutschmark and sterling. That might have meant the worst of the problems would have been avoided but it would not mean a strong currency, which arguably our strong economy could do with.

What is the outlook?

That is anyone's guess and, as the saying goes, anyone who knows would be retired and lying on a Caribbean island. For what it's worth, the markets seem to expect the euro to recover to around $0.90 within three months. Having said that, six months ago many investment houses expected it to be close to parity by Christmas and most have long since binned that prediction.