Spain leads to the collapse of euro

Euro becomes weaker with each passing day

In brief: New financial reporting in Europe and falling credit rating of Spain greatly weaken the exchange rate euro.

So, Friday evening ended with the collapse of euro. Rating agency Fitch downgraded the rating of Spain at one stage to the level of AA +, which is why the euro fell to 1.2263 on Friday. As Fitch indicated that the sovereign credit profile of Spain remains a “very powerful”, but the agency forecasts that by 2013 the national debt will reach 78% of GDP.

The agency pointed to the “inflexibility” of the labor market and noted that the restructuring of regional and local banks will provide challenges in Spain. It is worth noting that Fitch Ratings lowered its rating to only follow the agency S & P, rating of Spain, on which is already at the level of AA, that is, twice demoted from the highest point. At the same time the most conservative is the agency Moody’s, which still holds a rating of Spain at the highest level of AAA. Thus, at least one more blow to the euro may still feel, if lower rating agency Moody’s, and if they are down to the level of rating S & P, then the euro will have three hits. In general, S & P agency of this trio is the most aggressive. It is the first downgraded Greece earlier this year, and it is the first Greek downgraded to “junk”. If we assume that the rating of Greece to the landfill will bring two other agencies, the euro will wait another two strokes down. However, in Ireland the worst rating, AA-, now at Fitch. Here, S & P with its AA behind by one step, and Moodys with AA1 in two steps. Another step for the other two agencies, Moody’s conservative yields in Italy and Portugal, where these countries have the same ratings (Aa2 by Moody’s, AA-by S & P, AA-by Fitch). In short, the euro could potentially receive many more blows from the rating agencies. While there is no question that the rating of the U.S. ever could be downgraded from the highest AAA.

In fact, problems in the market of the same Greek debt was caused by lowering of the rating agencies and the noise in the media, if they had not, the Greek pyramid continued to grow as successfully as the U.S.. But now the Greek crisis ended by buying the balance of the ECB. During the first 2 weeks of the program ECB redemption of bonds purchased by more than 26 billion euros. Much of this amount relates to the bonds of Portugal, Spain, Greece, Italy and Ireland. And after China intervened in the Eurozone, we strongly do not see any negatives for the single currency in the near future. While we still expect growth to a mark 1.2550 couples.

Ukrainian Globalist
2010-05-31 12:32, Currency news.

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2 comments к “Spain leads to the collapse of euro”

  1. Jack Says:

    Great article! Spain invested heavily in real estate because their central bank kept interest rates artificially low for so long and led to misinvestment in this sector.

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  2. admin Says:

    Great idea. Thank you. We will e-mail you later.

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