In the spotlight: The euro

After Standard & Poor's also lowered Portugal's credit rating on Tuesday and Spain's, the next day, the major European indices reacted with drops of three to four percent amid fears that the debt crisis might spread to other economies.

The common currency dropped to a one-year low against the dollar, but the situation calmed somewhat after it was rumored that Greece could potentially receive a E100-120 billion aid package, instead of the previously proposed E45 billion.

With Greece's debt downgraded, there are now more doubts than ever that the country will be able to obtain the cash to service its E300 billion debt – some 115 percent of its GDP. Experts worry that should Greece fail to do so, the euro's credibility would be crushed.

Germany, where aid for Greece is extremely unpopular, is still reluctant to officially pledge its help, as local elections in the country's most populous state of North Rhine-Westphalia are set to take place on May 9. A meeting of euro-zone leaders has been called for May 10, when a final decision on aid for Greece is expected.
Although Poland had largely seemed immune to Greece's woes due to its better economic situation and lower debt, the złoty took a tumble on Wednesday and the WIG20 lost 1.94 percent. The złoty rebounded on Thursday along with other emerging European currencies, but bad news from the euro zone might continue to negatively influence investor appetite for Central and Eastern European currencies.

"If European politicians do not reach an agreement, the global markets are in for a serious crisis," wrote Przemysław Kwiecień, chief economist at X-Trade Brokers.

The euro zone's woes may dampen Poland's enthusiasm to adopt the common currency. The country is obliged to join the zone according to its accession treaty and was until recently vehemently pushing to enter, but now as the zone's future is uncertain, analysts believe efforts could slow down.

Martyna Olik