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The euro fell to a 10-month low against the US dollar today, after EU government officials revealed that Greece may need the assistance of the International Monetary Fund. Exacerbating the situation was a downgrade to Portugal’s debt by Fitch.
The credit ratings agency today lowered its rating on the country’s debt by one notch to AA- with a ‘negative’ outlook, saying the country’s GDP per capita and trend growth are ‘significantly below’ what is typical for a AA country. ‘A sizeable fiscal shock against a backdrop of relative macroeconomic and structural weaknesses has reduced Portugal’s credit worthiness,’ wrote Douglas Renwick, an associate director at Fitch, in the report today. ‘Although Portugal has not been disproportionately affected by the global downturn, prospects for economic recovery are weaker than 15 European Union peers, which will put pressure on its public finances over the medium term.
