The European single currency dropped today to a new record low after concerns about the state of Spain’s economy worsen. The rising cost of financing debt Iberian country sent a pair EUR / USD to its lowest value since July 2010 Yesterday the country’s credit rating was downgraded for the third time this month, which was additional pressure on the euro and others considered more currency risk.
The single currency was unable to keep even the smallest advantage over its main competitors, since the beginning of the week optimism for the upcoming elections in Greece rose. On Monday, information came that the right-centrist party “New Democracy”, which supports the plan, agreed between Greece and its creditors, ranks first in the preliminary inquiries among voters. The focus of investors, however, was quickly shifted to what is happening in Spain and the mood is marred. The yield on ten year Spanish bonds rose to six month high yesterday and the sales of the securities increased the risk premium over German debt securities to the highest values for the past 17 years.
A source from the Ministry of Economy in Spain, the government is likely to recapitalize the bank Bankia, which has requested assistance from the government worth 19 billion euros by issuing new debt. That appears rumor was however not sufficient for the rating agency Egan-Jones Raitings Co., Which downgraded the country B to Bb-because of the plight of the banking system. According to preliminary estimates of analysts, bank losses totaled over 260 billion.
The other risk currencies also went down. The Australian dollar lost more than 0.5% compared to “dollar” after the data on retail sales disappointed investors in Australia, reported a decline of 0.2%. Escape from risk because of problems of the eurozone countries, and concerns about a decline in the growth of Chinese economy have reduced the Australian dollar by 6.1% only in May.
Dollar Index, which measures the performance of the greenback against a basket of six currencies other hand continues to increase in value, reaching 82.63. This is the highest level since September 2010