6 Jan 2015

Euro hits nine-year low

12:47 pm on 6 January 2015

The Euro has sunk against the US dollar to the lowest level in nearly nine years as investors worry about a possible Greek exit from the Eurozone and sliding oil prices.

Euro vs US Dollar

Photo: AFP

Fears mounted that an election in embattled Greece later this month could put the opposition anti-austerity party Syriza in power, jeopardizing the country's economic reforms mandated by the international financial rescue.

Over the weekend, the Der Spiegel weekly quoted German government sources as saying that Berlin sees a Greek exit from the Eurozone as "almost inevitable" should the left-wing Syriza party win.

The Euro slid to US$1.1864, the lowest level since March 2006, before recovering to US$1.1933 around 2200 GMT. That compared with US$1.2002 late on Friday in New York.

Oil prices continued to drop, with the US benchmark contract briefly falling below US$50 a barrel for the first time in more than five years over concerns about ample global supplies and weakening economic growth, particularly in Europe and China.

"Weights on the Euro include Europe's weak recovery, which has lagged far behind the US economy, worries about Greece's future and whether it would honor the terms of its bailout if an anti-austerity party should win the January 25 poll, and sustained and ongoing optimism in the outlook for the US and its currency," said Joe Manimbo, senior market analyst at Western Union Business Solution.

The US dollar gained 11 percent against a basket of major rival currencies last year.