Portugal Budget Stress Pressures Euro

Portugal is providing a fresh drag on the euro after it confirmed investors’ fears that debt stresses in the euro zone aren’t limited to Greece.

At 0945 GMT, the euro was trading at $1.4058, down from the $1.4075 in late New York trading Tuesday.

Late Tuesday, the country’s finance minister said the budget deficit for 2009 was equivalent to 9.3% of gross domestic product, above the 8% expected by the European Commission.

At the presentation of the government’s 2010 budget plan, Fernando Teixeira dos Santos ruled out broad-based tax hikes but promised strict cost control in an effort to bring the deficit down to 8.3% of GDP in 2010.

The deficit ratio is smaller than the 12.7% reported by Greece late last year–a shock that has punished Greek bonds and hit the euro hard in recent weeks. Nevertheless, the news confirms that Greece isn’t alone among the 16 euro-zone nations in suffering a harsh debt hangover.

WSJ

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