See More

Euro steady after Portugal rating slashed

Jul 06 2011 09:39 AFP

Related Articles

Euro climbs after Greek deal

Euro rises on hopeful Greek news

Greek doubts hit euro

Euro stabilises after Greek vote

Euro up slightly, all eyes on Greek vote

Euro firms on risk appetite


Tokyo - The euro recovered slightly against the dollar in Asian trade on Wednesday after sliding in the wake of a Moody's downgrade of Portugal to junk status, tempering optimism over progress on eurozone debt.

The euro fetched $1.4450 from $1.4418 late in New York on Tuesday, compared with levels above $1.45 Monday.

It was at ¥116.90, down from ¥117.32 on Tuesday.

Against the Japanese currency, the dollar bought ¥80.89 from ¥81.10.

The euro was supported by investors who remain optimistic about recent progress to resolve European debt problems despite Portugal's ratings setback, a senior dealer at a major bank in Tokyo said.

The single currency fell sharply overnight in the minutes after Moody's Investors Service slashed Portugal's credit rating by four notches to Ba2 from Baa1 and warned that it could be lowered further.

The agency said its main concern was that Lisbon would require a second bailout, just as Greece now does, and that private sector creditor banks would have to take some of the pain.

It warned European banks could face losses if they agree to roll over their Greek debt to give the embattled nation more time to organise its finances, as is being proposed by European officials.

Ratings agency moves, including earlier warnings from Standard & Poor's that current plans for a second Greek bailout constitute an effective default and a Moody's warning on local government debt in China, hit risk sensitive currencies such as the euro on Tuesday.

"It's apparent there's still a lot of water to pass under the bridge in Europe and the water is murky at that," Christopher Gore, currency analyst at GoMarkets in Melbourne, told Dow Jones Newswires.

After Greece passed tough austerity measures, eurozone finance ministers authorised the next €12bn tranche of last year's European Union-International Monetary Fund bailout over the weekend.

The move had eased concerns about a potential cascade of problems tearing through the eurozone and the global economy, but positive sentiment has since faded.

Attention was now shifting to the European Central Bank's rate-setting meeting on Thursday and key US jobs data Friday with "a hike by the (ECB) fully priced in" said Credit Agricole in a client note.

The ECB is expected to raise interest rates for the second time this year, by 0.25 percentage points to 1.5% in a bid to curb inflation.

The dollar was weaker against other Asian currencies, falling to Sg$1.2264 from Sg$1.2271 on Tuesday, to 1 064.30 South Korean won from 1 066.15 and to Tw$28.76 from Tw$28.78.

The unit also eased to 8 531.75 Indonesian rupiah from 8 536.75, to 42.84 Philippine pesos from 43.09 and to 30.45 Thai baht from 30.49.

greece  |  portugal  |  euro  |  europe debt crisis  |  markets


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

The Fast and Furious R40 million

With the Fast and the Furious 7 hitting South African cinema’s this April, all eyes are on the cars and we’re in for a treat!


Luxury living

This is the most expensive burger in the world!
Exclusive food items that WILL break the bank
Top 10 most expensive homes in the world
You can permanently live on a ship and sail the world!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How will you manage Vodacom’s price hike for contracts?

Previous results · Suggest a vote