Spanish debt continues to cause concern for the euro

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An increase in Spanish government bond yields influenced the euro’s fall against the dollar and the yen, and poor economic data in Spain causes worries over eurozone debt markets.

Spain’s credit ratings were cut by Standard & Poor. This provides a negative outlook as it warns the government’s budget deficit is expected to fall to lower than forecasted levels as a result of a decline in gross domestic product (GDP).

The extent of Spain’s economic plight was highlighted by data that revealed that the country was steeped in debt. Further figures show that almost a quarter of the nation is unemployed and retail sales are still falling for the 21st consecutive month.

Against the dollar, the euro was down 0.3 percent at $1.3170 and 0.5 percent at 10.6.45 yen. On Friday, Spanish 10-year bond yields reverted back above 6 percent. Investors are seeking to shelter their funds as German bond futures reached record highs.

Jeremy Stretch, Head of European Currency Strategy at CIBC Global Markets, said: "The euro is suffering this morning on renewed worries over peripheral euro zone countries.

"If you look at the downgrade and economic data out of Spain it makes pretty grim reading and spreads in Italy seem to be blowing out as well."

A debt auction hosted by Italy generated market interest. Up to €6.25 billion worth of bonds will be sold by Rome. The market is relying on help from domestic banks, which has aided Italy to push auctions through.

Transferring money to Spain

If you are looking to invest in Spain, think carefully about how you will be transferring money to Spain. Foreign currency exchange rates quoted by banks are almost always worse than the exchange rates available through specialist currency dealers.

So if you are sending money to Spain – which you will inevitably have to do if you are looking to make a property investment, be sure to compare the market before you buy your overseas currency.

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Spanish debt continues to cause concern for the euro

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