The euro retreated today as Moody’s Investor Service downgraded credit ratings of several Spanish regions. The news added to tensions caused by uncertainty about the bailout for the indebted nation.
Moody’s cut the ratings assigned to five Spanish regions (Andalucia, Extremadura, Castilla-La Mancha, Catalunya, and Murcia) by one or two notches. The rating agency explained its decision by “the deterioration in their liquidity positions, as evidenced by their very limited cash reserves as of September 2012 and their significant reliance on short-term credit lines to fund operating needs”. The announcement was somewhat surprising as earlier the agency kept Spain’s sovereign rating unchanged.
EUR/USD fell from 1.3058 to 1.2968 and EUR/JPY declined from 104.37 to 103.53 as of 13:27 GMT today.
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