Euro tumbles after Greece is downgraded

AP News
Posted: May 09, 2011 3:45 PM
Euro tumbles after Greece is downgraded

The dollar rose against the euro Monday as Europe's long-running debt crisis spooked investors, with Standard & Poor's cutting Greece's debt further into junk status.

The euro fell to $1.4336 in afternoon trading Monday from $1.4337 Friday. It fell to as low as $1.4253 earlier in the day, a steep drop from last Wednesday when the euro was worth more than $1.49 _ its highest point since December 2009.

There had been a sense in markets that the worst of the crisis had passed, helping the euro gain as much as 10 percent against the dollar this year. But now investors are unnerved by rumors _ strongly denied by European officials _ that say Greece may leave the euro or restructure its debt. Officials say that they may need to help Greece again, more than a year after it received a 100 billion euro ($160 billion) aid package.

Standard & Poor's, which downgraded the long-term bonds to B from BB-, said that Greece might eventually have to default on its debt adding that it could downgrade Greece again in the next few months.

Meanwhile, rival rating agency Moody's also said Monday that it was reviewing Greece for a possible downgrade.

In other trading Monday, the British pound rose to $1.6386 from $1.6370 Friday. The dollar fell to 80.39 Japanese yen from 80.58 Japanese yen, fell to 0.8726 Swiss franc from 0.8787 Swiss franc and fell to 96.44 Canadian cents from 96.92 Canadian cents.