Euro Falls to Two-Year Low of $1.21 as Yen Advances

The euro declined to a two-year low versus the dollar on concern anti-austerity opposition party Syriza will win Greek elections next month, endangering the country’s bailout agreement.

The euro declined 0.2 percent to $1.2132 in London after sliding to $1.2124, the weakest level since July 2012. The shared currency dropped 0.5 percent to 145.98 yen. The yen strengthened 0.3 percent to 120.32 per dollar.

Greek Prime Minister Antonis Samaras failed in his third and last attempt to persuade parliament to support his Presidential candidate, Stavros Dimas. Samaras is due to meet current President Karolos Papoulias in Athens to request early elections on Jan. 25. Opinion polls show Syriza led by Alexis Tsipras ahead of Samaras’s New Democracy party.

The 18-nation euro fell versus all but one of its 16 major counterparts amid speculation the European Central Bank will introduce more currency-depreciating stimulus next year to revive growth. The yen gained for the first time in three days as Asian stocks retreated, spurring demand for haven assets. China’s yuan fell to a six-month low versus the dollar. Malaysia’s ringgit slid for a second day as oil headed for its biggest annual decline since 2008.

The central bank cut interest rates in November for the first time in more than two years to spur growth. An official Purchasing Managers’ Index (CPMINDX) will indicate manufacturing failed to expand for the first time in more than two years.

The yuan was little changed at 6.2168 per dollar after depreciating to 6.2362, the weakest since June 25.

Ringgit Fall

The ringgit declined 0.2 percent to 3.5027 per dollar. It has fallen 6.5 percent this year, the worst performance among emerging Asian currencies.

The slump in crude prices to a five-year low will probably pare economic growth in net oil exporter Malaysia to the lower end of its 5 percent to 6 percent estimate for next year, Abdul Wahid Omar, a minister in the prime minister’s office, said Dec. 17. Oil has tumbled more than 45 percent this year.

The dollar is set to appreciate against all of its 31 major peers in 2014 for the first time in data going back to 1989 as quickening growth gives the Federal Reserve reason to start raising interest rates next year.

The dollar is poised to strengthen to 130 yen next year, Capurso said, a level last seen in 2002. The U.S. currency will probably strengthen past $1.20 versus the euro if the opposition Syriza party prevails in Greece’s elections and jeopardizes the terms of the country’s financial bailout, he said.