LONDON: The euro slumped to a nine year low on Monday as investors bet that the prospect of inflation across the region turning negative and mounting political uncertainty in Greece will force the European Central Bank (ECB) to unleash quantitative easing (QE).
The euro fell to $1.18605 EUR in early Asian trading on Monday, its weakest level since March 2006. In early European trade it was at $1.1964, down 0.3 percent from late US trade on Friday.
ECB president Mario Draghi said investors betting that the ECB will take the plunge and open up a bond buying program like the US, UK and Japanese central banks have done.
He further said the risk of the central bank not fulfilling its mandate of preserving price stability was higher now than half a year ago.
European shares were volatile, initially falling sharply before rebounding into positive territory within an hour of the open as investors digested the implications of the weak euro and yet another hefty slide in oil to a 5-1/2 year low.
