Euro falls to 22-month low on Spain downgrade

Associated Press

NEW YORK (AP) — The euro plunged to a fresh 22-month low Tuesday after a ratings agency downgraded Spain's debt.

The euro fell to $1.2487 late Tuesday from $1.2539 late Monday. The euro fell as low as $1.246 earlier, its lowest point against the dollar since July 2010.

Egan-Jones Ratings Company downgraded Spain saying that it may have trouble paying its debt as growth slows and rising unemployment rate. Spain has a 24.4 percent jobless rate and is battling its second recession in three years.

The downgrade came after more bad news for the country. On Tuesday, Spain said that retail sales fell 9.8 percent in April from a year ago. That's more than double the 3.8 percent drop in March.

Also the recently nationalized Bankia, Spain's fourth-largest bank, said late last week it would need an additional $24 billion in government support. Traders are concerned that Europe's fifth-largest economy may have trouble saving its banking sector, worsening the region's ongoing debt crisis.

There was also bad news from the U.S. on Tuesday. The Conference Board, a private research group, said that its Consumer Confidence Index fell to 64.9 from 68.7 in April.

The dollar strengthened against most other currencies Tuesday. The British pound fell to $1.5634 from $1.5681 late Monday.

The dollar rose to 79.51 Japanese yen from 79.46 yen, to 0.9618 Swiss franc from 0.9584 Swiss franc and to 1.0242 Canadian dollar from 1.0240 Canadian dollar.