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Euro struggles in Asia on Greek eurozone exit fears

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The euro edged up from a fresh nine-year low against the dollar on Wednesday in Asia, but the unit remained under pressure owing to fears of a possible Greek exit from the eurozone.

[TOKYO] The euro edged up from a fresh nine-year low against the dollar on Wednesday in Asia, but the unit remained under pressure owing to fears of a possible Greek exit from the eurozone.

In Tokyo, the single currency fell to US$1.1839 in early Asian trade - its lowest level since February 2006 - before recovering to US$1.1870 against US$1.1892 in New York on Tuesday.

The euro jumped to 141.27 yen from 140.93 yen, while the dollar rose to 119.02 yen, from 118.50 yen in New York.

Investors have been skittish amid plunging oil prices and fears that Greece could exit the eurozone if an anti-austerity opposition party wins a general election later in the month.

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Analysts have warned that a victory for the far-left Syriza party could see them abandon stringent measures required under the IMF-EU bailout of the country, which could in turn lead it out of the currency bloc.

A weekend report in Germany's Der Spiegel quoted Berlin sources as saying they consider Greece's exit "almost inevitable" if Syriza wins.

The euro has also been under pressure on speculation that the threat of deflation in the eurozone could force the European Central Bank to unleash further easing measures, which tend to weaken the currency.

"The only real brake on the euro downtrend this quarter should be its popularity, with investors already heavily on board," Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney, told Bloomberg News.

"With (ECB chief Mario) Draghi looking increasingly likely to override German objections to QE (quantitative easing) at the January 22 ECB meeting and the US economy firmly on track for higher interest rates this year, any euro bounces should be modest in scale and brief in duration." Markets were also looking ahead to the release of minutes from the US Federal Reserve's last meeting later in the day and jobs data on Friday.

AFP

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