LONDON -- Expectations that Greece will quit the eurozone are growing once again on anti-austerity leftists' growing clout there ahead of this month's election, causing the euro to plunge Monday.
The euro sank to the mid-$1.18 range at one point in Asian markets. It slipped below the psychologically important $1.20 mark, as well as its nadir after the 2010 European debt crisis, and hit its weakest level since March 2006. The euro also fell under $1.20 in London.
The currency's downturn, caused partly by deflation concerns, accelerated over the political turmoil in Greece and the possibility of the country leaving the euro bloc. The German government is prepared for a Greek exit, Germany's Der Spiegel magazine reported Saturday, further fueling speculation.
On a radio program Monday, French President Francois Hollande called on Greece to fulfill its debt obligations but said Greeks are free to choose their own destiny. Germany and France may be trying to reel Greece back in by giving it the cold shoulder.
Voters head to the polls Jan. 25. A radical-left party that opposes the austerity measures is said to hold the lead. The country has achieved a primary surplus and is no longer at the same disadvantage as before, according to U.K. financial services company Barclays, which does not completely discount the possibility of an exit from the eurozone.
The leftists are dismissing these concerns for now, but party leader Alexis Tsipras says he would ask the European Union to cancel Greece's debt. The tough stance could put a wedge in relations with the EU. Prime Minister Antonis Samaras warns that Greece will default if the opposition takes power.
In a survey by German market research group Sentix, 19.9% of investors expected as of December's end that at least one eurozone member would leave -- up significantly from 7.7% at the end of September. Greece's 10-year government bonds now have an extremely high yield in the 9% range.
The European debt crisis, triggered in part by Greece, dealt a heavy blow to its neighbors as well. But only a few seem to think these rumors of a Greek exit would create a similar problem this time around, thanks to the European Stability Mechanism and other safety nets developed in response to the previous crisis.
But should concerns over Greece persist, they could lead to looser fiscal discipline in other highly indebted eurozone members and push the currency further down. Spain and Portugal are holding their own elections this year, and the region's politics will likely continue to impact the euro.