Greek credit downgrade gives dollar a boost

NEW YORK: The dollar firmed sharply against the euro Friday after Greece's credit rating was slashed, renewing fears over the eurozone debt crisis.

The euro was trading at $1.4155 around 2100 GMT, down from $1.4308 at the same time Thursday.

The dollar held fairly steady against the Japanese currency, at 81.70 yen compared with 81.60 yen, after the Bank of Japan left interest rates unchanged.

The euro was under pressure amid concerns about finances in the eurozone, where Greece, Ireland and as of this week Portugal have all received multi-billion-euro bailouts.

The European currency dived after Fitch Ratings lowered Greece's credit ratings by three notches, citing its growing problems in getting its public finances in order.

"It's the ongoing Greek crisis" that is hammering the euro, said David Solin at Foreign Exchange Analytics.

"It is going to have to get resolved one way or another and at this point the markets are not very optimistic," he said.

"There are a lot of concerns that something dramatic could happen during the weekend," he added.

There has been much speculation that Greece might have to restructure or reschedule its debt, a move that some fear could plunge the eurozone back into turmoil to match that of the global financial crisis in 2008.

Fitch said its downgrade reflected the "scale of the challenge facing Greece in implementing a radical fiscal and structural reform programme necessary to secure solvency of the state and the foundations for sustained economic recovery."

At the same time, Fitch said it believed that "substantial new money will be provided to Greece by the EU and IMF and that Greek sovereign bonds will not be subject to a 'soft restructuring' or 're-profiling' that would trigger a 'credit event' and default rating from Fitch."

In late New York trade, the dollar slipped to 0.8780 Swiss francs from 0.8805 francs late Thursday.

The pound firmed to $1.6236 from $1.6135.