TOKYO: The euro fell to a fresh 12-year low against the dollar on Wednesday, extending a broad decline after the European Central Bank kicked off its 1 trillion euro bond-buying programme this week.
The ECB began printing money to buy sovereign bonds on Monday with a view to supporting growth and lifting euro zone inflation from below zero. Yields on the debt of nearly all euro zone countries dropped to record lows overnight.
“With the ECB beginning its quantitative easing, there’s definitely a sense that funds are flowing out,” said Mitul Kotecha, head of FX strategy, Asia-Pacific for Barclays in Singapore.
“It’s not a one-way flow, but there is this expectation with ECB QE that there is going to be substantial outflows from Europe, as QE intensifies,” he said.
German 10-year yields dropped to 0.226 percent, below the 10-year Japanese government bond yield of 0.430 percent. The two-year German bond offered a negative yield of 0.235 percent.
The euro slid to $1.0666, extending Tuesday’s 1.4 percent drop to lows not seen since April 2003 and opening up the way to the 2003 trough of $1.0501. It last stood at $1.0671, down about 0.2 percent on the day.
