The Japanese yen dropped against the U.S. dollar the largest amount in one month on Tuesday, as markets reacted to the decision by Fitch Ratings to cut the country's credit rating.
Bloomberg reports that the credit ratings service decided to downgrade Japan upon deciding it was taking insufficient action to alleviate its growing debt problems.
Prime Minister Yoshihiko Noda, according to The New York Times, has relied largely upon an plan that would increase consumption taxes to 15 percent, but Fitch argues that the country will still see its debt-to-GDP ratio hit 240 percent by the end of the year.
The country's long-term international currency rating and its domestic currency rating were both lowered to A+, from AA and AA-, respectively. That rating puts Japan just ahead of Greece in terms of risk of investment.
In response, the yen fell against all 16 of its major rival currencies. At 11:22 a.m., the Yen fell 0.81 percent against the dollar.
"Everyone has been betting on a weaker yen for some time now and we’re finally starting to see signs of that," Blake Jespersen, managing director of foreign exchange at Bank of Montreal, told Bloomberg.
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