Euro briefly sinks to 11-year low vs dollar after Greek vote

[TOKYO] The euro sank to a new 11-year low against the dollar Monday after anti-austerity party Syriza swept to victory in Greece's general elections, throwing its international bailout into doubt with fears over a possible exit from the eurozone.

The common currency was trading at US$1.1184, after dipping to US$1.1088 in Tokyo early morning trade, the lowest level since September 2003.

The fall comes after the euro tumbled to a fresh 11-year low of US$1.1115 in New York on Friday, after the European Central Bank unveiled a vast bond-buying programme in a bid to kickstart the struggling eurozone economy.

The unit also fell to 131.68 yen in Tokyo against 132.03 yen, while it slipped to 0.9802 against the Swiss franc, from 0.9876 on Friday.

Leftist party Syriza pulled off a historic win in Greece's election Sunday, becoming the first anti-austerity party in power in Europe.

The victory presents a new challenge to the debt-hit country's international bailout programme and has ignited fears about the possibility of Greece exiting from the eurozone.

"The drop in the euro-dollar certainly reflects fears over the eurozone economy stirred by the Greek election," said Marito Ueda, senior dealer at FX Prime.

The euro rebounded later as traders had factored in the impact to some extent in advance, "but you might want to be careful about the further developments - the euro will remain top-heavy", Ueda said.

Left-wing Syriza took over 36 percent of the vote compared to 28 percent for the conservative New Democracy party of incumbent Prime Minister Antonis Samaras, with more than half of ballots counted.

Syriza's leader Alexis Tsipras, 40, who would be Greece's youngest prime minister in 150 years, vowed to renegotiate the terms of Greece's 240-billion-euro (US$269 billion) bailout with the European Union and the International Monetary Fund.

The possibility of Greece defaulting on its debt repayments has stoked concern the country could be forced to leave the eurozone - a so-called "Grexit".

Financial markets had already been spooked at the prospect of Syriza coming to power before the election.

In a sombre statement conceding defeat, Samaras said: "I hand over a country that is part of the EU and the euro. For the good of this country, I hope the next government will maintain what has been achieved." But some analysts threw cold water on the likelihood of Greece leaving the bloc.

"We still think Greece will stay within the eurozone," Elsa Lignos, a senior currency strategist at RBC Capital Markets, said in a note.

"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."

AFP