Euro Falls to 11-Year Low as Syriza Wins Election; Aussie Drops
January 25, 2015 (Bloomberg) — The euro weakened to an 11-year low against the dollar after Syriza, the party committed to renegotiating Greece’s debt obligations, won a general election.
The 19-nation currency fell for a third day versus the greenback, after tumbling last week on the European Central Bank’s plan to pump 1.1 trillion euros ($1.23 trillion) into the economy to stoke inflation. The Australian and New Zealand dollars declined as a slump in oil damped demand for nations that export commodities. The yen strengthened versus all except two of its 16 major counterparts.
“Euro selling pressure will continue as Greeks rejected fiscal austerity, heightening the possibility of Greece leaving the currency bloc,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., a margin-trading-services provider. “Markets are sensitive to risk.”
The euro fell 0.4 percent to $1.1162 at 9:53 a.m. in Tokyo after sliding to $1.1098, the weakest level since September 2003. The common currency dropped 0.4 percent to 131.38 yen after reaching 130.15, the weakest since September 2013. The yen was little changed at 117.67 per dollar.
Syriza leader Alexis Tsipras, addressing supporters in central Athens Sunday night after Prime Minister Antonis Samaras conceded defeat, said Greece’s era of bowing down to international creditors is over.
Tsipras’s Coalition of the Radical Left, known by its Greek acronym, took 36 percent of the vote with 90 percent of the ballots counted. That compares with 28.1 percent for Samaras’s New Democracy. Golden Dawn placed third with 6.3 percent, followed by To Potami, a potential Syriza coalition partner, with 5.9 percent. The result hands Tsipras a mandate to confront the program of austerity imposed in return for pledges of 240 billion euros in aid since May 2010.
The euro has tumbled 6.2 percent during the past month, the worst performer of 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen rose 5.7 percent and the dollar gained 3.3 percent.
“We still think Greece will stay within the eurozone,” Elsa Lignos, a senior currency strategist at RBC Capital Markets in New York, wrote in a note to clients. “Ultimately we think an anti-bailout is unlikely to last through the summer. Greece will stay within the euro area, which coupled with a euro-area economic recovery in the second half of the year, would give the euro a V-shaped profile for 2015.”
Australia’s dollar dropped for a sixth day as crude oil fell toward the lowest level in almost six years.
The Aussie fell 0.3 percent to 78.90 U.S cents, while New Zealand’s currency slumped 0.4 percent to 74.23 cents. Australian financial markets are shut today for a holiday.