Euro plummets to nine-year low against the US dollar as ECB suggests QE is on the way

5th January 2015

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The euro has collapsed to a nine-year low against the US dollar as investors anticipate the European Central Bank (ECB) may take further action to prop up the region’s embattled economy.

The currency dropped by 1.2% against the greenback to $1.1864, taking the euro to its lowest level since March 2006, according to a BBC News report.

The currency subsequently bounced back to circa $1.19. The fall comes on the back of ECB president Mario Draghi, suggesting the bank could introduce a quantitative easing (QE) strategy.

In addition further turmoil in Greece, where this month’s general election could see the left-wing Syriza party take power, is also believed to have helped push the currency down.

The ECB has already slashed interest rates to a record low level, taking them into negative territory and purchased bonds issued by private companies, but a full programme of QE has yet to be launched.

Last week Draghi indicated in an interview that the ECB may soon introduce a policy of QE by buying government bonds in a bid to pump cash into the banking system to help give the region’s economy a much needed boost.

Speaking to German newspaper Handelsblatt, Draghi said: “We are making technical preparations to alter the size, pace and composition of our measures in early 2015.”

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