A Moody’s downgrade of France’s sovereign rating wiped out a good part of the euro’s gains Monday, the eve of a crucial eurozone finance ministers meeting on Greece’s debt crisis.
The euro dropped after Moody’s cut France’s gold-plated AAA credit grade by one notch to “Aa1” and maintained a negative outlook, meaning that another downgrade was possible. Moody’s cited the France’s “disproportionately large” exposure to the troubled countries on Europe’s periphery.
The euro bought $1.2778 at 2230 GMT, down from $1.2816 a half hour earlier. Still, it had gained ground from $1.2741 late Friday. The euro also dropped to $103.99 yen, down from 104.25 yen shortly earlier but up from 103.60 yen late Friday.
The European currency had advanced on renewed hopes that eurozone finance ministers, meeting Tuesday, “will agree to release funds to Greece,” said David Gilmore at Foreign Exchange Analytics. “That buys time for officials to come up with a more permanent solution and puts the risk on trade back on the table.” The dollar fell against the Swiss currency, to 0.9423 francs from 0.9452 late Friday, while the pound bought $1.5904, up from $1.5880.
