The euro has fallen to its weakest level against the dollar in seven months, following the French rejection of the EU consitution.

France’s decision sparked worries about reform prospects and analysts are warning the euro zone needs deep reform because of its anemic growth and low confidence.

In response to the French no-vote, President Jacques Chirac named Dominique de Villepin as the country’s new prime minister - a move likely to reassure the public as Villepin is seen as a Chirac loyalist and unlikely to introduce reforms.

One analyst told Reuters: “A lot of questions have been raised by this vote and none of this is immediately positive.

“The vote is seen by some as a vote against reform and a vote for the traditional model ... and Villepin is generally viewed as more of a social, traditional French model of management."

The euro’s one per cent drop saw it hit the floor against the dollar at $1.2330 at midday today (Tues, May 31), reversing a run since mid-October 2004 which saw record highs against the dollar in December.