The euro plunged to the lowest level in nine years amid speculation the European Central Bank may begin quantitative easing next week in order to combat deflation.
The shared currency fell 0.5 percent to trade at $1.1771 as of 1:26 p.m. in New York and hit $1.1753, its lowest level since 2005. The euro also slid 1 percent to 138.69 yen. The yen surged 0.5 percent to 117.82 per dollar after touching 117.74, its highest level since Dec. 17.
The euro also took a hit from comments by a key Greek official, Finance Minister Gikas Hardouvelis, that the country could break away from the currency union should the opposition-which is leading by a thin margin-win the elections.
“The euro has been pressured by several factors, including prospects of central-bank policy action and concerns regarding political developments in Greece,” Sireen Harajli, a New York-based strategist at Mizuho Bank Ltd, told Bloomberg News. “It seems that there is very little to support the single currency.”
The shared currency was also battered by comments from ECB Governing Council member Ewald Nowotny who told a panel in Vienna on Monday evening that officials should approach the risk of deflation more seriously and promptly.
Meanwhile, the Swedish krona advanced against the euro as consumer prices plunged less than expected. Consumer prices decreased by 0.3 percent on an annual basis in December, reported Statistics Sweden. This favorably compared against analysts’ expectation of a 0.5 percent decline. The krona rose 0.6 percent to 9.5021 per euro and remained slightly unchanged at 8.0732 versus the dollar. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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