IRELAND - Moody's has slashed Ireland's sovereign debt rating by two notches, to BAA3 from BAA1, on its weak economic growth prospects.
The ratings agency's outlook for the country remains ‘negative' due to the decline of the government's financial strength and uncertainty around solvency tests, which Moody's says will hinder economic growth.
It adds the country may need to take further austerity measures to meet its fiscal goals, while its financial position may suffer due to European interest rates rising by 25 basis points last week.
The euro dropped sharply against the dollar after the announcement, dipping 0.2% to $1.4450.
The move comes in stark contrast to rival rating agency Fitch, which yesterday upgraded its outlook for the country.
Fitch took Ireland off its negative watch and described the Irish banking stress tests as ‘credible'.
The agency rates Ireland BBB+ with a stable outlook as the group believe the economy is nearing stabilisation.
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