Central banks in emerging markets have been dumping euros to shore up their own currencies, contributing to the euro’s drastic slide in recent weeks, according to traders.

The euro lost nearly 7 per cent against the US dollar in May – its biggest monthly fall since September – as fears over a Greek exit from the single currency grew and investors sold the government debt of peripheral European nations.

Currency traders said central banks were among the biggest sellers of the euro – reversing their normal pattern of buying the single currency when it weakens to diversify their stockpiles of foreign exchange reserves. “The most recent bout of euro concerns has cooled central bank ardour for the euro considerably,” said Steven Englander, foreign exchange strategist at Citigroup.