On Tuesday one of the largest analytical agencies Egan-Jones lowered the credit rating of Spain for the third time to “BB-“. Investors fear that the rating of the country will soon be reduced by three influential international rating agencies: S&P, Moody’s and Fitch. Such a situation already occurred in April.
Experts say the country’s economy is sinking into recession. Moreover, Spain is suffering from the budget deficit and enormous public debt, as a result, the national banking sector is being underfinanced.
On Friday the authorities of Spain announced the plans to financially support a troubled bank, Bankia. So, market participants doubt whether Spain will follow the path of Greece or not.
Consequently, the single European currency is sliding. The euro reached new highs versus the US dollar, having fallen by 100 points to the level of 1 US dollar and 24.8 cent on Tuesday.
Demand for the euro shrank. The single European currency will be under pressure until the Eurozone crisis unwinds.