LONDON, March 16: The euro fell against the dollar on Wednesday after Moody's downgraded its credit ratings for indebted Portugal, while the US unit eased versus the yen as traders tracked nuclear developments in Japan.

In London trade, the European single currency dropped to $1.3955 from $1.3996 in New York late Tuesday.

The dollar slipped to 80.67 yen from 80.73 yen on Tuesday.

Portugal raised a fresh one billion euros ($1.39 billion) in a short-dated bond sale Wednesday but had to pay investors much higher rates of return after Moody's downgrade.

Moody's Investors Service slashed Portugal's debt rating late Tuesday to A3 from A1, and gave it a negative outlook, citing concerns the government would not be able to balance its books amid “subdued growth prospects.”The dollar meanwhile was after the US Federal Reserve maintained ultra-low interest rates even as it gave a more positive outlook for the economy.

The Fed's actions supported the dollar, said David Forrester, currency strategist for Barclays Capital in Singapore.

The main reason for that is interest rates ... It's a boost for the dollar from the” Fed, he told AFP.

Fed policymakers also left in place $600 billion stimulus spending as they noted easing unemployment, a pick-up in consumer spending and growing business optimism.

The economic recovery is on a firmer footing and overall conditions in the labour market appear to be improving gradually, it said.—AFP