The Japanese currency yen rose today after credit ratings of many nations like Italy, Spain and Portugal were lowered by Moody’s poor Investor Service. Market sentiment seemed to be hugely affected by this as it was expected to be positive after good news from Greece.
As per the data provided by close sources, Spain’s rating was reduced to A3 from A1, Italy to A3 from A2 and Portugal slipped to Ba3 from Ba2. Apart from this, the rating opinion also became negative for France, Austria and the United Kingdom keeping in view the performance of Moody’s Investor Service.
Reasons for the agency’s decision:
Various reasons have been given by the agency for its decision. The first reason is that the ambiguity over the euro’s prospects for rectification of its economic framework and the fiscal and the resources which will be made accessible to deal with the critical situation. Second reason certainly blames the downgrading macro-economy of the Europe and says that it’s progressively weak macroeconomic prospects, which warn the execution of the domestic austerity programs and the structural rectification which is required in order to promote combativeness. The third reason is an impact, which Moody’s believe some factors that will persist to have market confidence that is likely to be fragile, with higher potential for additional shocks to financial conditions.