Euro Plunges to 11-Year Low after Draghi Boosts Bond-Purchase Plan

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Euro Plunges to 11-Year Low after Draghi Boosts Bond-Purchase PlanThe euro fell to the lowest level in 11 years after the European Central Bank boosted its bond-purchase program to incorporate government bonds, a move that normally devalues the currency.

The shared currency plunged 2.1 percent to trade at $1.1371 as of 1:35 p.m. New York time and fell to $1.1363, its lowest level since September 2003. The dollar and the euro last traded on an equal basis in 2002. The euro fell 1.8 percent to steady at 134.44 yen and hit 134.29, its weakest level since Oct. 16. The dollar rose 0.2 percent to 118.25 yen.

Addressing the press in Frankfurt, the European Central Bank President Mario Draghi said that the central bank plans to purchase 60 billion euros ($69 billion) worth of public and private debt on a monthly basis till September 2016.

“Draghi has done a great job on surprising the markets,” Paresh Upadhyaya, a director of currency strategy and portfolio manager at Pioneer Investment Management Inc in Boston., told Bloomberg News. “For euro-dollar, $1.10 is definitely in sight within the next month, if not sooner, and parity will become quite consensus in the coming weeks.”

Meanwhile, the Brazil’s real rose after the central bank indicated it may increase interest rates soon after it surprisingly increased its benchmark interest rate to 12.25 percent on Thursday. The real rose 1 percent to trade at 2.5750 per dollar. The Russian ruble advanced, halting a two-day losing streak, as investors’ risk appetite grew due to the ECB’s stimulus plan. The ruble rose 1.5 percent to 64.3855.

However, the Denmark’s krone plunged after the central bank lowered interest rates for the second time so far this week. The krone fell 2.2 percent to 6.5444 per dollar after touching 6.5488, its lowest level since September 2003 after policy makers reduced the target lending rate by 15 basis points to -0.35 percent on Thursday after reducing it by a similar margin on Monday. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com