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By Bloomberg

The euro slumped below $1.05 for the first time in 12 years after European Central Bank purchases of sovereign debt sent yields to record lows across the region.

The shared currency is the biggest loser Thursday among its developed-market peers after ECB President Mario Draghi reiterated the central bank’s commitment to spur inflation. The euro was 22 percent undervalued, the most among Group-of-10 counterparts, according to purchasing-power parity data compiled by the Paris-based Organisation for Economic Cooperation & Development.

“The euro is starting to look cheap at current levels from a purchasing power parity valuation standpoint,” Roger Hallam, the London-based chief investment officer for currencies at JPMorgan Asset Management, wrote in an e-mail. “Nevertheless, powerful flows working against the euro will continue to weaken it in the near term.”

The euro slid as much as 0.5 percent to $1.0495, the weakest level since January 2003. The 19-nation common currency dropped 0.2 percent to 127.79 yen as of 1:08 p.m. in Tokyo, following a 1.2 percent slide Wednesday.

The euro has weakened a record 13 percent this year, with still almost three weeks before the quarter ends, eclipsing the 10.6 percent decline during the credit crunch in the third quarter of 2008.

The ECB intends to buy 60 billion euros ($63 billion) a month of private and public debt through September 2016, in a policy that typically debases currencies by increasing the amount of money in circulation. The 1.1 trillion euro quantitative-easing program enters its fourth day Thursday.

Stimulus Ready

“We can deploy and we will deploy monetary policy in a way that can and will stabilize inflation in line with our objective,” Draghi said Wednesday at a conference in Frankfurt.

The euro has slumped 7.8 percent this year, the most among 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The dollar, the best performer, has gained 7.8 percent and the yen advanced 6 percent.

The greenback has outperformed its major peers this year as the Federal Reserve considers the timing of its first interest- rate increase since 2006.

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, gained 0.1 percent to 1,218.88 and was set for its highest close based on data back to 2004.

A U.S. retail sales report Thursday may influence Fed policy makers ahead of their meeting next week. Sales rose 0.3 percent from January when it slid 0.8 percent, according to the median of analyst estimates in a Bloomberg New survey.

“The asset-purchase program, which is starting now, that’s obviously going to drive the euro lower,” said Fabian Eliasson, head of U.S. corporate foreign-exchange sales at Mizuho Financial Group Inc. in New York. “The dollar is just crushing it across the board.”