Irish credit rating cut hits value of euro
Credit ratings agency Moody's warns Ireland may need to take further austerity measures
The value of the euro against the dollar has fallen after the Moody's verdict on Ireland. Photograph: Barry Batchelor/PA
The euro dropped against the dollar after credit ratings agency Moody's delivered another negative verdict on Ireland on Friday morning.
Moody's cut Ireland's rating by two notches to Baa3 and left the outlook negative. The agency said the country may need to take further austerity measures to meet its fiscal goals and that its financial position could suffer because of higher European Central Bank interest rates.
"Should the intended fiscal consolidation goals not be met, a further rating downgrade would likely follow," Moody's warned. "Moreover, a further deterioration in the country's economic outlook would also exert downward pressure on the rating."
The euro fell to a session low against the dollar this morning, down 0.2% to $1.4450.
Gary Jenkins at Evolution Securities described the new rating as "possibly the most uncomfortable of places to be on the ratings scale – one false step from junk".
In contrast, Fitch affirmed its rating at BBB+ yesterday, took Ireland off its negative watch and assigned a negative outlook after the Irish banking stress tests which the agency described as credible, noting that the economy appeared to be nearing stabilisation. S&P rates Ireland BBB+ with a stable outlook.
No comments:
Post a Comment