By Lisa Twaronite, MarketWatch
TOKYO (MarketWatch) — The dollar gave back some ground in Asia trading Wednesday, particularly against the euro, as Ireland’s credit rating was cut.
Standard & Poor’s said it cut its long-term sovereign credit rating on Ireland to A from AA-, and its short-term rating to A-1 from A-1 .
The new ratings reflect the agency’s view that the Irish government appears likely to borrow “over and above” the agency’s previous projections to fund further bank capital injections.
The euro “took the news in its stride,” said Sue Trinh, senior currency strategist at Royal Bank of Canada in Hong Kong, in a note to clients.
After what Trinh described as a “knee-jerk selloff” to $1.33665 on the news, the euro proceeded to rally as high as $1.3419, according to FactSet data.
The euro (EURUSD 1.3310, -0.0058, -0.4340%) pared those gains and was trading at $1.3390, still up from $1.3364 in North American trade late Tuesday. See real-time currency quotes and tools
The Irish government will reportedly take a majority stake in lender Bank of Ireland, as it struggles to try to restore credibility to the country’s battered banking sector and economy. Read latest on Ireland
The dollar index (DXY 79.93, +0.25, +0.31%) , which tracks the performance of the greenback against a basket of other major rivals, fell to 79.581 from 79.716 late Tuesday.
Against the Japanese yen, the dollar (USDYEN 83.3000, +0.1500, +0.1804%) slipped to ¥83.07 from ¥83.13 late Tuesday.
On Tuesday, the yen initially sold off against the U.S. unit, after North and South Korea exchanged artillery fire at a South Korean island near the two sides’ western border. But with no new hostilities reported Wednesday, the Japanese unit took back lost ground.
The British pound (GBPUSD 1.5747, -0.0028, -0.1775%) bought $1.5778, compared to $1.5777 late Tuesday.
