The euro has dropped to its lowest rate against the dollar in 16 months after France sold 8bn euros ($10.3bn, £6.6bn) of bonds at an auction.
The euro fell to $1.2831 against the dollar and was at an 11-year low versus the yen.
France paid an interest rate of 3.29% to borrow for 10 years, up from 3.18% at the last sale in December.
Many investors fear that France is poised to lose its top credit rating, making it more expensive to borrow.
In December, France saw its AAA credit rating placed on negative outlook by rating agency Fitch.
Fitch said the change in outlook was prompted by the heightened risk of government liabilities arising from the eurozone's debt crisis.
At Thursday's sale, demand from investors for the benchmark 10-year bonds had fallen.
The bid-to-cover ratio was 1.64, almost half of the 3.05 it was in the December auction.
France introduced an 65bn-euro austerity plan in November.
The gap, or spread, on French bonds compared to comparable debt from Germany - Europe's largest economy - hit record highs last year.
Italy and Spain - both passing painful austerity measures - will both have to sell debt in the coming months.
bbc.com
