In his budget for 2013 Croatian Finance Minister Slavko Linic anticipates a widening of the fiscal deficit to 3.1% of gross domestic product, which is forecast to grow by 1.8% after shrinking by 1.1% this year. Moody’s Investors Services, a credit rating agency, is unimpressed and has left the country’s sovereign rating unchanged at Baa3, the lowest “investment” grade.

But Croatia is not the only European country to have attracted the unwanted attention of Moody’s. It has lowered France’s rating from AAA, the top-line triple-A rating to which every country aspires, to Aa1; still very good but no cigar. Only one of the big three ratings firms now awards an AAA rating to France, which was recently the subject of a leader in The Economist magazine entitled “The time bomb at the heart of Europe”.

Things like that spoil the appetite of investors for the euro and therefore for the Croatian kuna, which is loosely pegged to the single European currency. During the last month the kuna has remained mostly between 7.5kn and 7.55kn to €1, at the weaker end of its range in recent months but firmer than it was looking at the beginning of the year.

As usual, it is the sterling/euro exchange rate that defines the sterling/kuna price. And for the last two months it has not been going anywhere. During that time the pound has wandered between €1.225 and €1.265 and at the time of writing is in the middle of that range with no apparent sense of purpose. GBP/HRK at 9.4 is also close to the middle of the range it has covered in the last three months.

If the Spanish prime minister is to be believed, the euro crisis has been solved. He recently told a press conference in Madrid that “I’m totally and absolutely convinced that the worst has passed.” Others will no doubt beg to differ. Not only do many expect Spain to need a bailout, they expect Greece sooner or later to default on its debts because it cannot possibly afford to repay them. Investors are remarkably sanguine about the situation, possibly because a Greek default and a Spanish bailout have been so well-flagged that everyone is prepared for them (or at least believe themselves to be).

But the worry that is taking their place is Euroland’s economy. It shrank by a provisional -0.1% in the third quarter of the year and is expected to shrink further in coming months. And with austerity being dumped across Euroland by the truckload there will be no rapid return to growth. Prime Minister Rajoy might be confident that the worst is over but anyone who had put a pound in their piggybank every time that sentiment was expressed during the last three years would be ordering a Ferrari by now.

Moneycorp is a foreign exchange company who specialise in Send Money Abroad and Foreign Exchange.