Dhaka, Bangladesh (BBN) - The Euro (EUR) fell to a near 17-month low in anticipation that Standard & Poor's would downgrade the ratings of several Euro Zone countries.
The downgrades were the latest blow to the Euro Zone, which has been mired in a debt crisis and appears headed for recession. During mid week, however the EUR rose as slightly better-than-expected Chinese economic growth data soothed investor worries about the Euro Zone debt crisis.
The EUR kept its steady level for rest of the week as focus returns to Europe with Portugal testing investor confidence in a debt sale and Greece resuming talks on its debt restructuring.
Moreover, the solid demand at Spain's Treasury-bill auction also boosted the EUR and helped ease its recent downward pressure, although investors view this latest rally as a correction from its recent sell-off.
The week ended with EUR getting off to a positive start following solid gains overnight after the news that IMF (International Monetary Fund) wanted to bolster its war chest to help tackle the Euro Zone debt crisis.
The EUR rose as high as USD 1.2867, putting even more distance from a 16-month trough of USD 1.2624 hit at the start of the week, according to a weekly market update.
The update also said the huge liquidity injection by the European Central Bank into the region's banks looks to be in progressive pace but whether it proves to be the turning point in the Euro Zone debt crisis that has been roiling global markets is not yet clear.
BBN/SSR/AD-20Jan12-8:34 pm (BST)