TOKYO: The euro fell to a nine-year low against the dollar yesterday as bets mounted that the currency will suffer further declines, faced with the possibility of more monetary easing by the European Central Bank and its diminishing status as a reserve currency.
The euro was in retreat after ECB President Mario Draghi late last week underscored the divergence between European and US monetary policy, which is set to remain a key theme in 2015.
The common currency fell to $1.1860 in early Asian trade, its lowest since March 2006. It last stood at $1.1950, down 0.4 percent on the day. The euro also fell against the yen, stooping to a two-month low of 146.36 yen. The euro shed nearly 12 percent against the dollar in 2014 with the Federal Reserve poised to hike rates in 2015 thanks to a recovering economy while ECB’s monetary policy is so far headed in the opposite direction.
Draghi told the German newspaper Handelsblatt that the ECB was less likely to preserve price stability than it was six months ago, suggesting it was ready to take bolder steps on monetary stimulus early this year to shore up the flagging euro zone economy and ward off deflation.
“There were basically three factors that pushed the euro lower. First was Draghi’s comment, second was the prospect of a weak eurozone inflation data print on Wednesday and lastly IMF’s central bank statistics,” said Yunosuke Ikeda, senior FX strategist at Nomura Securities in Tokyo.
Reuters
