In an interview with the Guardian newspaper, the international financier who "broke the Bank of England" by successfully speculating against the pound in 1992 questions the assumption that the euro will eventually become a strong currency.

He says that there are "internal tensions inherent in a common currency without a common fiscal policy".

Policy-making in the euro-zone has become paralysed between the conservative impulses of the European Central Bank (ECB) and the more expansionist instincts of the German finance minister, Oskar Lafontaine.

The head of the ECB, Wim Duisenberg, has been resisting calls for cuts in European interest rates from finance ministers.

More problems

But Mr Soros says the problems go beyond that split.

"[Before the euro] European monetary policy was dictated by Germany. But under the euro that is no longer true as each country is represented. That is actually a disparity."

Mr Soros warns that until the fundamental flaws in the structure of the European Union are tackled - and until there is much more co-ordination of fiscal policy - the currency will continue to fall.

The euro has already dropped by nearly 10% against the dollar and the pound sterling since its launch in January. In early trading in London on Thursday it steadied against the dollar, moving above $1.09.

Mr Soros has long been a sceptic of the "democratic deficit" in the European Union, but his attack on the currency could worry policymakers. It was his remarks on the need to devalue the rouble in August that helped spark the collapse of that currency and led to a new round of global financial turmoil.