Euro hits nine-year low on eurozone worries, falling oil

Euro hits nine-year low on eurozone worries, falling oil

Fears mounted that an election in embattled Greece later this month could put the opposition anti-austerity party Syriza in power, jeopardising 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. 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 on 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 Jan 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 dollar gained 11 per cent against a basket of major rival currencies last year.

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