NEW YORK -- The euro recovered from a one-year low versus the dollar Wednesday as Germany said it could approve the financial bailout for Greece by as early as May 7.
Greece needs help to keep from defaulting on the $13 billion in debt repayments due May 19
The prospect of a default and longer-term debt problems in Greece and other European countries has dragged the euro lower from a level above $1.51 this past November.
The euro hit a year low of $1.3143 in European trading before recovering to $1.3235 Wednesday morning in New York. Late Tuesday, the common currency was worth $1.3184.
On Tuesday, credit ratings agency Standard & Poor's downgraded Greece's credit rating to junk status and cut Portugal's debt rating.
If others follow, including Moody's and Fitch, it could play havoc with Greek bonds and possibly make them ineligible as collateral at the European Central Bank.
"This has now become an issue of credibility with the euro itself, and the likelihood is that some form of debt restructuring may now be the only option for Greece, despite the IMF and EU commission insisting that this is out of the question," said Michael Hewson, currency analyst at CMC Markets.
The International Monetary Fund and the 15 other countries using the euro have pledged to loan Greece euro45 billion. Germany's parliament must approve its chunk of aid, which has been unpopular with Germans.
A Finance Ministry spokesperson said Wednesday that Germany could approve aid by May 7, in time to get Greece the money it needs for its May 19 debt repayment.
In other morning trading trading, the British pound fell to $1.5212 from $1.5258 and the dollar rose to 94.07 Japanese yen from 93.15 yen.
