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Forex

Euro sold on speculation of monetary easing

TOKYO -- Investors are selling the euro amid mounting anticipation of additional monetary easing by the European Central Bank, spurred by ECB President Mario Draghi's speech Friday at the Jackson Hole meeting of central bankers.

     The euro dropped to about $1.317 in Tokyo on Tuesday, its lowest level in almost a year and down roughly 1.4% on the week. It fell against the yen as well, at one point reaching a weekly low of 137.02.

     The trend was fueled by Draghi's remarks at Jackson Hole, where he said that "inflation expectations exhibited significant declines at all horizons."

     Draghi had previously expressed negative views on additional easing, because the expected inflation rate had been stable at around 2%. But after he acknowledged the decline in his speech, more traders have come to believe that the ECB would be forced to take quantitative easing steps, such as purchasing government bonds.

     The slowing European economy is also feeding this speculation. Germany's Ifo business climate index for August, released Monday, hit its lowest level in around a year at 106.3. Long-term interest rates in major European countries, such as Germany and Italy, dipped to record lows amid anticipation of monetary easing.

(Nikkei)

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