It was Thursday (December 9) last week that the euro was again significantly depreciated because of the stripping of Ireland’s ‘A’ credit status. Fitch was the first credit rating agency that stripped Ireland of its high credit status. As a result, the forex value of the euro slid thereby allowing other major currencies being traded against appreciate in value. The British sterling, for instance, appreciated at €1.175.

The credit rating agency Fitch has reduced Ireland’s credit status from ‘A’ rating down to BBB+ rating. Despite of the downgrading of Ireland’s credit status, the economic prospects of Ireland were still considered as stable. According to Fitch, the downgrading of Ireland’s credit rating was primarily because of the high costs involved in restructuring and sustaining the banks of Ireland. Of course, the bailout grant for Ireland is an emergency loan that still needs to be repaid. Consequently, the overall trust of the financial markets on the eurozone has significantly weakened because of the recent bailout of Ireland.

In an official statement released to the media, the credit rating agency Fitch has said that Ireland’s former credit rating was not anymore consistent or compatible with the its capacity to pay its debts and investment trustworthiness. Meanwhile, other credit ratings agencies, Moodys and S&P have maintained their on Aa2 and A ratings, respectively. However, they are reviewing the sovereign rating of Ireland for possible downgrading.

Compared to Greece’s BBB- Fitch rating, Ireland still has advantage despite of the fact that they both needed to be bailed-out to prevent insolvency and possible spread of the sovereign debt crisis. The bail-outs of these two countries has eroded the foreign exchange value of the euro and also threatened the economic stability of the entire eurozone.

One does not need to become a forex trader to understand the negative impact of the eurozone crisis on the forex value of the euro. However, it is not just anymore just a currency exchange issue but an issue of economic and political unity of the eurozone countries and the European Union in general.

After the official bailout of Ireland, many investors and analysts are still worried about the economic stability of the region as other economically weaker countries, such as Spain and Portugal, which may eventually need to be bailed-out.

According to some economic analysts, the threat of Irish defaulting on its sovereign debt and its being bailed-out sent the wrong message to the markets not only about Ireland but about the entire eurozone.