Fitch Cuts Hungary’s Rating, Greece May Follow; Euro Down

The euro dropped today after the Fitch Ratings agency downgraded the credit rating of Hungary and warned about the possible reduction of Greece’s rating, fueling the worries about the ability of the Eurozone peripheral economies to deal with the debt crisis.

The Fitch downgraded Hungary’s long term foreign currency credit rating to BBB- with a negative outlook today, citing the lack of the coherent medium-term fiscal strategy. The agency also stated that “there is a heightened probability that Greece’s sovereign ratings will be downgraded”.

EUR/USD rose from its opening level of 1.3098 to the intraday high of 1.3151, then decline somewhat and traded sideways until the news about the downgrade drove it even lower. The currency pair traded at about 1.3073 as of 13:43 GMT today. EUR/JPY slumped from 109.45 to 108.71 after it earlier reached the intraday low of 108.52.

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