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Tokyo - The euro struggled in Asia on Tuesday after dropping to its lowest level in nearly nine years against the dollar, as traders fret about a possible Greek exit from the eurozone and falling oil prices.
In Tokyo, the single currency slightly recovered to $1.1955 in afternoon trade from $1.1933 in US trade and $1.1864 on Monday in Asia, its lowest level since March 2006.
But it weakened to ¥142.13, against ¥142.74.
The dollar also slipped to ¥118.90, compared with ¥119.61 in New York. The yen is considered a safe bet in times of uncertainty.
"Crude keeps dropping and Greek politics are a worry," said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. in New York.
"There is broad pressure on stocks to fall, and risk aversion is spurring gains in the yen," Yamashita told Bloomberg News.
Fears are mounting that Greece's opposition anti-austerity party Syriza will win this month's general election, jeopardising the country's economic reforms mandated by an international bailout.
Over the weekend, German weekly Der Spiegel quoted government sources as saying that Berlin sees a Greek exit from the eurozone as "almost inevitable" should the left-wing Syriza party win.
That sent the single currency plunging, a drop that was exacerbated by expectations the European Central Bank (ECB) will unveil at its January meeting a round of bond-buying, known as quantitative easing (QE).
The euro's sell-off started on Friday after German business daily Handelsblatt published an interview with ECB head Mario Draghi in which he said deflation was a threat to the eurozone and the bank needed to be prepared to counter it.
He added that the risk that the central bank will not be able to push inflation up "has increased compared to six months ago".
National Australia Bank, referring to slowing inflation in Germany, said in a note: "After Draghi's weekend newspaper comments on the rising threat of deflation, the weak German CPI (consumer price inflation) further heightened expectations that QE is imminent."
Sentiment also suffered as oil prices tumbled, with the US benchmark contract briefly falling below $50 a barrel for the first time in more than five years on concerns about ample global supplies and weakening economic growth, particularly in Europe and China.
The US dollar was mixed against other Asia-Pacific currencies.
It declined to Sg$1.3331 from Sg$1.3360 on Monday, to 32.90 Thai baht from 33.05 baht and to Tw$31.96 from Tw$32.02.
The greenback also fell to 12 620.00 Indonesian rupiah from 12 672.00 but rose to 45.01 Philippine pesos from 44.99 pesos and to 63.37 Indian rupees from 63.34 rupees.
The Australian dollar increased to 81.41 US cents from 80.61 cents, while the Chinese yuan bought ¥19.15 from ¥19.37.
