Euro at 9 year low while Greece may separate from the EU

© AFP Photo/Philippe Huguene

The euro fell to $1.1861, its weakest level since 2006 on the back of uncertainty over Greece's position within the single currency. A strong dollar and expectations that the European Central Bank will beef up its stimulus program have also not helped.

The euro dropped to a low of $1.1861 against the dollar during Asian trading hours on Monday. However, it did pick up slightly to trade at $1.1950 during European trading. This has seen the single currency lose as much as 1.2 percent of its value.

European shares were volatile, initially falling sharply before rebounding into positive territory within an hour of the open as investors digested the implications of the weak euro and yet another hefty slide in oil to a 5-1/2 year low, Reuters reports.

The euro's slump has not been helped uncertainty concerning Greece. German Chancellor Merkel and Finance Minister Wolfgang Schaeuble have repeatedly warned the southern European nation about reneging on the bailout conditions that were set by Berlin. However, , according to a report in .

© AFP Photo/Thierry Charlier

Federal Chancellor of Germany Angela Merkel

"Many European officials believe a Greek exit would be manageable, and in contrast to 2010-2011, we wouldn't see the same cascading effect on countries like Spain or Ireland," Fredrik Erixon, director of the European Centre for International Political Economy in Brussels, told Bloomberg.

Elections in less than three weeks' time in Greece have poured doubt on whether it is committed to the euro zone. The anti-austerity Syriza party have been campaigning against what they believe are draconian financial restrictions implemented against the 240 billion euro bailout received by Greece. In a speech on January 3, the party's leader, Alexis Tsipras described these constraints as being "unreasonable and catastrophic."

© AFP Photo

Alexis Tsipras, leader of the radical leftist party Syriza, delivers a speech during a congress of the party in Athens, on January 3, 2015.

Syriza has a narrow lead in opinion polls ahead of the January 25 election, however Prime Minister Antonis Samaras warned if Tsipras's party is victorious, this will lead to a default and force Greece to leave the euro zone.