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Euro Sinks To Nine-Year Low Against Dollar

The euro has dropped to a nine-year low against the US dollar as investor fears over growth prospects continue to grow.

On Monday the currency dropped 1.2% in value to €1.19, the weakest spot exchange rate since early 2006.

The pound was worth almost €1.28 on spot markets – helping UK travellers to the continent.

The euro sell-off comes amid doubts that a new quantitative easing (QE) programme, hinted at by European Central Bank (ECB) boss Mario Draghi, will help the ailing currency.

Concerns have also been raised about a Greek left-wing government led by the Syriza party taking power – cutting austerity reforms – just months after it clawed its way out of a lengthy recession.

French President Francois Hollande said it was up to Greece to decide its future in the eurozone, with any new leaders having “to respect the commitments made by their country”.

His comments on national radio come after a weekend German report said the Merkel government believed the currency bloc would survive even if there was a Greek exit.

Following Mr Hollande’s comments, the EU’s executive commission said euro bloc membership was “irrevocable” – but hinted Greece could renegotiate some terms after its 25 January elections.

EU spokeswoman Annika Breidthardt said that if the Greek elections call for a need to look again at the conditions of Athens’ membership within the eurozone, “we will deal with that once the Greek voters have cast their verdict”.

The latest sell-off comes as a poll by the Financial Times of 32 leading eurozone economists casts doubt on the effectiveness of any QE programme by the ECB.

A majority believe the ECB will launch a major recovery plan this year, as growth and inflation both continue to weaken in the 19-nation currency bloc.

Some put a possible QE programme at €500 (£390bn) while others believe it may top €1tn (£780bn).

The ECB previously said it and Mr Draghi supported an extension of its monetary policy to help the eurozone recover.

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