Greece elections: Euro falls to 11-year-low as anti-austerity party Syriza sweeps to victory

The currency skidded to $1.1098 against the dollar on the vote outcome before recovering to $1.1186

Syriza leader Alexis Tsipras (AFP/Getty )

The Euro hit an 11-year low against the dollar on Monday after leftist leader Alexis Tsipras and his anti-austerity party Syriza swept to victory in the Greek general election on Sunday.

Stock prices fell and the currency skidded to $1.1098 on the vote outcome before recovering to $1.1186, still down 0.2 per cent from last week.

The election was the second blow since last week for the euro, still smarting after the European Central Bank unveiled a huge bond-buying stimulus programme.

Tsipras has promised voters that five years of austerity, "humiliation and suffering" imposed by international creditors are over. He is set to form the first eurozone government that is openly opposed to bailout conditions imposed by the European Union and International Monetary Fund, collectively known as the troika, during the economic crisis.

Tsipras pronounced the troika and its regular debt inspections "a thing of the past".

However, renegotiating with other eurozone governments could raise the risk of Greece eventually leaving the currency union - though most market players expect Tsipras to eventually make compromises to avoid the so-called "Grexit".

In fact, the broad consensus in the markets is that any renewed tensions over Greece are unlikely to hurt broader investor sentiment much beyond an initial shock.

Unlike at the height of the debt crisis in 2011-12, European banks now have limited exposure to Greece, and European policymakers have frameworks to deal with indebted countries, analysts say.

"At the moment, the market believes that if there is any (debt) restructuring it would only involve the official sector and for now, the possibility of Greece leaving the euro zone even with the incoming government is small," Sebastien Galy, senior foreign exchange analyst at Societe Generale in New York, told Reuters.

Greece's creditors insist the country must abide by previous commitments to continue receiving support.

In Germany, Bundesbank president Jens Weidmann said he hoped "the new Greek government will not make promises it cannot keep and the country cannot afford".

The election results will be the main topic at today's meeting of eurozone finance ministers.

Belgium's minister, Johan Van Overtveldt, said there is room for some flexibility, but not much.

"We can talk modalities, we can talk debt restructuring, but the cornerstone that Greece must respect the rules of monetary union - that must stay as it is," he told VRT network.

The ECB's plan to pump more than a trillion euro into the banking system in the coming year and a half is underpinning risk sentiment, which boosted European share prices to seven-year highs on Friday.

Tsipras's party just missed a majority in parliament after defeating Prime Minister Antonis Samaras's conservative coalition by a wider margin than expected.

With 99.8 per cent of the vote counted, Syriza had 149 seats in the 300-member parliament with 36.3 per cent of the vote. The conservatives were on 27.8 per cent, and the extreme right Golden Dawn party in third place with 6.28 per cent.

Tsipras is to meet the leader of the right-wing Independent Greeks party, an anti-bailout ally, this morning, with the party already expressing willingness to join a coalition.

Additional reporting by agencies