The value of the euro dropped to a nine-year low against the dollar on Monday, as fears over the stability of the eurozone escalated in the first week of the new year, raising investor concerns about the possibility the European Central Bank (ECB) will launch a quantitative easing program in 2015.
Speaking on French radio, President Francois Hollande addressed questions about whether Greece is likely to make an exit from the eurozone.
"The Greek people are free to decide who they want as leaders," he said, later adding that it is up to Greece alone to decide if it will stay in the eurozone.
Last month, Greek parliament members failed to elect a new president, paving the way for snap elections to take place January 25.
The left-wing Syriza party, which is leading opinion polls, has promised to end austerity if it wins and says it would ask Europe to wipe out a large chunk of its debt, leading many analysts to predict a possible Greek exit from Europe’s single-currency union.
Hollande’s comments came on the heels of a report the German government is prepared to let Greece leave — a report that has since been countered by officials in the German government. On Monday, the European Union’s spokeswoman said membership in the eurozone was “irrevocable,” but suggested Greece might be allowed to renegotiate some conditions of its membership.
On Monday the euro, in circulation in 19 of the 28 EU countries, dropped 1.2 percent against the dollar and hit its weakest level since March 2006.
The fall comes after ECB President Mario Draghi indicated the bank could soon begin a program of quantitative easing.
Draghi was quoted in media outlets Friday suggesting the bank could begin buying government bonds, a step already taken by the central banks of Britain and the United States.
In a survey carried out by the Financial Times, 26 economists said they expect the ECB to start buying government bonds this year, against five who thought it would not. Most of those polled said with or without quantitative easing, they expect growth and inflation to remain weak in the year ahead.
But some observers say it's too early to predict the ECB’s next move.
The first ECB meeting of the year is due to take place on January 22, preceding the Greek election by just a few days later. Analysts say the euro is likely to remain highly volatile in the lead up to those events.