TOKYO: The euro struggled in Asia Monday on growing expectations that the European Central Bank will announce a massive bond-buying scheme to buoy the eurozone's struggling economy.
In Tokyo, the single currency slipped to $1.1556 and 135.42 yen, from $1.1566 and 135.87 yen on Friday in New York, where at one point it had dropped below $1.1500 for the first time since November 2003.
Investors have been moving out of the euro before the ECB meeting on Thursday. Analysts are forecasting it will see the introduction of sovereign bond purchases, known as quantitative easing (QE).
The scheme essentially entails the bank printing euros in order to boost lending and fight off deflation -- similar to the plan recently ended by the US Federal Reserve. However with more cash in circulation demand for the single currency weakens.
"Nothing could be clearer than the current economic and policy divide between the US and Europe," said National Australia Bank.
"As the Fed ponders rate lift-off and US consumer sentiment hits its highest level for 11 years, the ECB last week has been putting together a QE plan that will get some sort of approval from Germany."
The dollar weakened to 117.13 yen, against 117.46 yen in US trading, as jittery investors sought out safer assets following a plunge in Chinese stocks. The drop was sparked by regulators punishing several brokerages for violating margin trading rules, which fuelled an extended market rally.
"The slide in Shanghai stocks is leading to yen buying," Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo, told Bloomberg News.
"With risk sentiment deteriorating right now, anything obscure will lead to reducing positions."
The Bank of Japan also holds a meeting this week, but few expect a further loosening of its monetary policy as it tries to counter a downturn in the world's number three economy.
In other trading, the euro bought 1.0017 Swiss francs.
On Thursday the Swiss National Bank announced it was abandoning the minimum rate of 1.20 francs against the euro, a limit imposed three years ago during the eurozone debt crisis to stop the franc from appreciating too much.
The shock announcement was felt across the globe as the franc immediately strengthened by 30 percent against the euro.
The dollar was mixed against other Asia-Pacific currencies.
It strengthened to 1,077.00 South Korean won from 1,076.90 won on Friday, to Sg$1.3276 from Sg$1.3238, and to 12,600.30 Indonesian rupiah from 12,570.00 rupiah.
The dollar weakened to Tw$31.50 from Tw$31.57, to 32.55 Thai baht from 32.68 baht, and 61.67 Indian rupees from 61.92 rupees, while it was flat at 44.67 Philippine pesos.
The Australian dollar fell to 82.10 US cents from 82.35 cents, while the Chinese yuan fetched 18.83 yen against 18.74 yen.
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