The Euro dropped sharply against the dollar earlier today after rumours of a French credit downgrade entered circulation.
The rumour was quickly dismissed by the French government who stated that they have not been informed of any changes to the country’s credit rating.
Some financial experts believe that the rumour has been sparked by a Citi research note, predicting that France could see a credit rating cut this autumn.
Despite their reassurances the Euro dropped from 1.315 to 1.308 and is taking time to recover.
Presently, France is AAA with Moody’s City and Fitch but three months ago last week; S&P downgraded the countries rating to AA+.
All three agencies have France on a negative outlook the first step to a rating cut. The rumours are damaging to the Eurozone as a whole due to its precarious situation.
The global economy really doesn’t need such rumours as according to IMF leader Christine Largarde; “We are seeing light recovery, blowing on the spring wind. But we are also seeing very dark clouds on the horizon.”
The French and other Eurozone members must be praying that the rumour is just that, a rumour.
