Euro Falls to Lowest Since 2003 on Syriza Victory; Krone Slides – Bloomberg

Posted: Monday, January 26, 2015

The euro fell to an 11-year low as a party
committed to renegotiating Greece’s international bailout won a
victory in weekend elections, setting up a possible
confrontation with the nation’s European partners.

The 19-nation currency dropped for a third day versus the
dollar as Syriza leader and Greek Prime Minister-elect Alexis
Tsipras said the era of bowing to international demands for
budget cuts was over. Norway’s krone and the Australian dollar
slid as a slump in oil damped demand for commodity currencies.
The yen rose against all except one of its 16 major peers as
Japan’s trade deficit was smaller than economists forecast.
China’s yuan headed for its biggest two-day loss since 2008.

“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 0.2 percent to $1.1184 at 2:07 p.m. in Tokyo
after sliding to $1.1098, the weakest level since September
2003. The common currency dropped 0.3 percent to 131.61 yen
after reaching 130.15, the lowest since September 2013. The yen
gained 0.1 percent to 117.66 per dollar.

Tsipras, addressing supporters in central Athens on Sunday
night after outgoing Prime Minister Antonis Samaras conceded
defeat, said the new government’s priority “will be for Greece
and its people to regain their lost dignity.”

Rising Volatility

Tsipras’s Coalition of the Radical Left, known by its Greek
acronym, took 36.4 percent of the vote with 95 percent of the
ballots counted. Samaras’s New Democracy party’s was second with
27.8 percent. The result hands Tsipras a mandate to confront the
program of austerity imposed in return for pledges of 240
billion euros ($268 billion) in aid since May 2010.

“What we do think this outcome brings is once again
volatility back to the fore,” Ben Pedley, head of investment
strategy for Asia at HSBC Private Bank in Hong Kong said in an
interview with Bloomberg’s “On The Move” with Rishaad Salamat.
“We’re looking at $1.09, which right now looks quite
conservative” for the euro, he said.

The euro has tumbled 6.1 percent during the past month, the
worst performer of 10 developed-nation currencies tracked by
Bloomberg Correlation-Weighted Indexes. The yen rose 5.9
percent, the best performance and the dollar gained 3.3 percent.

Yen Gains

The yen advanced for a second day versus the dollar as
investors sought haven assets and as a finance ministry report
showed Japan’s exports rose to the highest level in six years.

Overseas shipments climbed 12.9 percent from a year
earlier, the finance ministry said, compared with the median
estimate for a gain of 11.2 percent in a Bloomberg News survey.

The krone fell toward the weakest level since 2002 versus
the dollar as crude oil fell to the lowest level in almost six
years. Oil and gas make up about two thirds of Norway’s exports.

The Norwegian currency slumped 0.5 percent to 7.8070 per
dollar after declining to 7.8745 on Dec. 16, the weakest since
June 2002. It fell 0.4 percent to 98.7299 per euro.

Australia’s dollar dropped for a sixth day, sliding 0.3
percent to 78.82 U.S cents after reaching 78.55, the least since
July 2009.

“We do see a decline in the Australian dollar continuing
for a little while longer, perhaps by 2016, to sort of the
mid-70 cents range,” said Pedley at HSBC Private Bank, which
oversees $382 billion. “Certainly the Australian economy is
going through a period of change and we would say domestic
demand does look relatively soft.”

The yuan dropped to the weakest since June after central
bank Deputy Governor Pan Gongsheng said last week the
European Central Bank‘s bond-buying program added pressure
for the currency to depreciate.

“It’s going to be some hard times for the yuan as China
will keep monetary policy relatively loose to ensure economic
growth, which means more supply of the local currency,” said
Daniel Chan, an analyst at Brilliant & Bright Investment
Consultancy Ltd. in Hong Kong.

The yuan slid 0.5 percent to 6.2569 per dollar, extending
its two-day drop to 0.8 percent, the most since December 2008.

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