TOKYO---The euro struggled in Asia on Tuesday after dropping to its lowest level in nearly nine years against the dollar, as traders fret about a possible Greek exit from the eurozone and falling oil prices.
In Tokyo, the single currency edged up to $1.1946, from $1.1933 in US trade and $1.1864 on Monday in Asia, its lowest level since March 2006. It weakened to 142.55 yen, against 142.74 yen.
The dollar also slipped to 119.33 yen, compared with 119.61 yen in New York. The yen is considered a safe bet in times of uncertainty.
"Crude keeps dropping and Greek politics are a worry," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. in New York.
"There is broad pressure on stocks to fall, and risk aversion is spurring gains in the yen," Yamashita told Bloomberg News.
Fears are mounting that the opposition anti-austerity party Syriza will win this month's general election, jeopardising the country's economic reforms mandated by an international bailout.
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.
That sent the single currency plunging, a drop that was exacerbated by expectations the European Central Bank (ECB) will unveil at its January meeting a round of bond-buying, known as quantitative easing (QE).
The euro's selloff started on Friday after German business daily Handelsblatt published an interview with ECB head Mario Draghi in which he said deflation was a threat to the eurozone and the bank needed to be prepared to counter it. He added that the risk that the central bank will not be able to push inflation up "has increased compared to six months ago".
National Australia Bank said in a note: "After Draghi's weekend newspaper comments on the rising threat of deflation, the weak German CPI further heightened expectations that QE is imminent."
Sentiment suffered as oil prices tumbled, with the US benchmark contract briefly falling below $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.
AFP
