NEW YORK — The dollar climbed against the euro after the credit ratings agency Fitch slashed Ireland's debt rating, saying the country's big bailout showed its debt crisis was worse than had been known. The move highlighted the euro region's problems and prompted traders to resume selling euros.
The European Union bailed out Ireland because of its soaring borrowing costs following the rescue of Greece in May. Investors are nervous that Portugal or Spain may be next, and that the current 750 billion euro fund would not be big enough to rescue Spain.In late trading in New York, the euro dropped to $1.3185 from $1.3261 late Wednesday. Earlier in the day, the euro traded at just over $1.33.
Fitch lowered its rating Thursday on Ireland's credit to BBB-plus from A-plus and said the outlook was stable, suggesting no further downgrades are expected.
There were also rumors among traders that a ratings agency could cut Italy's debt rating, said Brown Brothers Harriman analyst Marc Chandler. But he added that he "is not inclined to believe" the rumor.