The euro fell against the dollar, yen and pound after Moody’s Investors Service lowered Ireland’s credit rating, stoking concern that Europe’s debt crisis may worsen as Greece battles to avoid a bond restructuring. The shared currency slid against a majority of its 16 most- traded peers as Moody’s cut Ireland to the lowest investment grade and indicated more downgrades may follow. The yen rallied after China said inflation reached the fastest pace in more than two years, spurring demand for a refuge and reviving concern the world’s second-largest economy will take steps to cool growth. “There’s an increase in risk aversion, so it makes sense that we’re seeing this slight selloff in the euro,” said Kasper Kirkegaard, a senior currency strategist at Danske Bank A/S in Copenhagen. The euro declined as much as 0.3 percent to $1.4442 and traded at $1.4455 as of 6:33 a.m. in New York. The 17-nation currency lost 0.5 percent to 120.39 yen. Japan’s currency gained 0.2 percent to 83.30 per dollar, and has gained 1.7 percent since April 8. The Dollar Index was near the lowest since December 2009 on bets rising commodity prices won’t be enough to convince Federal Reserve policy makers to bring forward interest-rate increases. Restructuring Concern Europe’s currency fell to an almost one-week low against the dollar yesterday after Germany’s finance minister and Standard & Poor’s said Greece may need to restructure debt to avoid defaulting. Greece will announce more than 22 billion euros of deficit-reduction measures through 2014 today, according to Finance Minister George Papaconstantinou. The euro has still gained 8 percent versus the dollar this year on bets accelerating inflation will prompt euro-area policy makers to raise interest rates, even as the so-called peripheral nations struggle to reduce their debt burdens. “Greece’s problems won’t be solved by restructuring its debt but by restructuring the country,” Prime Minister George Papandreou said today in Athens in comments broadcast live by state-run Net TV. The euro stayed lower even as a report showed inflation in the 17-nation euro-region accelerated more than forecast to 2.7 percent in March, the fastest pace in more than two years. The European Central Bank raised its key rate last week to 1.25 percent from a record low 1 percent and indicated further increases may follow. The Fed has kept its target rate for overnight lending between banks at zero to 0.25 percent since December 2008. China Data China’s economy grew 9.7 percent in the first quarter, while consumer prices increased 5.4 percent in March from a year earlier, the statistics bureau in Beijing said today. The median forecasts in Bloomberg surveys of economists were for economic growth of 9.4 percent and inflation of 5.2 percent. The Asian nation will implement “prudent” monetary policy and ensure stable consumer prices, China’s cabinet said after meeting this week to review the economy. The central bank has raised rates four times since the global financial crisis. “Higher interest rates and inflation tend to hurt growth, which knocks confidence, and that would help the yen as guys clear out their short-yen positions,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “When risk aversion kicks in, the yen gets bought across the board.” The Dollar Index, which tracks the greenback against six U.S. trading partners’ currencies, rose less than 0.2 percent to 74.80 after falling to 74.617 yesterday, the lowest since December 2009. U.S. Prices The U.S. currency has weakened 4.8 percent against a basket of nine developed-nation peers this year, according to Bloomberg Correlation-Weighted Currency Indexes. That’s the second-worst performance, trailing the yen. The U.S. consumer-price index climbed 0.5 percent in March, matching the previous month’s reading, which was the biggest gain since June 2009, a survey showed before the Labor Department data today. Excluding volatile food and fuel costs, so-called core prices may have advanced 0.2 percent in March for a third month, another survey showed. Fed Chairman Ben S. Bernanke last week said an acceleration in inflation is likely to be transitory. Fed Bank of Richmond President Jeffrey Lacker said yesterday the central bank should end its stimulus programs before inflation picks up. Britain’s pound rose for a third day against the euro, adding 0.3 percent to 88.32 pence. It was little changed versus the dollar at $1.6362. Bank of England policy maker Andrew Sentance said in an interview with Bloomberg yesterday that a rate increase to boost the currency wouldn’t be “unwelcome,” because a slowdown in inflation may prove short-lived. “We’re going to see a further upward move in inflation through the summer,” and “there’s clearly a risk that inflation goes up to 5 percent or a bit above,” Sentance said. While consumer-price growth unexpectedly slowed to 4 percent in March, it’s still double the central bank’s target. The nine-member Monetary Policy Committee voted to keep its benchmark interest rate at a record low of 0.5 percent last week to boost the U.K.’s economy. To contact the reporters on this story: Garth Theunissen in London gtheunissen@bloomberg.net; Candice Zachariahs in Sydney at czachariahs2@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net

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