The euro slipped to a one-week low against the dollar as concern that Greece may become the currency region’s first default outweighed the European Central Bank’s interest-rate increase. The 17-member currency weakened as investors considered whether ECB President Jean-Claude Trichet will comment on the central bank’s acceptance of Greek debt as loan collateral in the event of a default when he briefs the press from 2:30 p.m. in Frankfurt. The 25 basis-point rate increase to 1.5 percent was predicted by all 55 economists surveyed by Bloomberg. “I thought this would be a day where the euro would get some support, as ECB policy is obviously an asset,” said Lutz Karpowitz, a currency strategist at Commerzbank AG in Frankfurt. “But we’ve also got this problem with a collateral rule. Nobody knows if Trichet, in his press conference, will really make clear what the thoughts of the ECB are. Everybody is already speculating. That brings the focus a bit away from the positive part of the ECB decision.” The euro slipped 0.4 percent to $1.4263 at 12:54 p.m. in London, the lowest level since June 28. It traded 0.3 percent lower at 115.55 yen. The dollar was little changed at 81.02 yen. The ECB waived some of its collateral rules to provide a lifeline to Greek banks a year ago. While banks can currently obtain as much money as they need from the ECB for up to three months against eligible assets, including government bonds, policy makers may no longer accept Greek debt as collateral if the country defaults. Greek Creditors Greek creditors meeting in Paris yesterday to examine proposals to roll over maturing Greek bonds may be willing to risk a planned and managed default, said Charles Dallara, the managing director of the International Institute of Finance. The common currency depreciated 0.5 percent after Trichet’s June 9 news conference, when he signaled the bank may increase rates today. He damped investor expectations for further moves by reiterating that inflation will fall below the ECB’s 2 percent limit next year. Consumer prices rose 2.7 percent from a year earlier in June. Today’s conference is “about what the ECB says about rate hikes going forward,” said Paul Robson, a senior foreign- exchange strategist at Royal Bank of Scotland Group Plc in London. “If they say risks to inflation and growth have moved to the downside, the euro would be quite vulnerable. Euro-dollar has had a very tight correlation with rate spreads over the last year, and that’s set to continue.” BOE Rates One-month implied volatility for the euro-dollar exchange rate rose for a fourth day, increasing to 12.11 percent. It was at 11.95 at the beginning of the month. The pound slipped against the greenback as the Bank of England left its key rate at a record low 0.5 percent. The U.K. central bank also held its bond-purchase program at 200 billion pounds. Governor Mervyn King is tolerating soaring inflation as he seeks to support U.K. growth in an economy hit by the sharpest government spending cuts since World War II. Sterling fell 0.2 percent to $1.5975. It was 0.2 percent higher at 89.29 pence per euro. The Swiss franc weakened against all of 16 major counterparts tracked by Bloomberg after a report showed inflation accelerated less than expected in June, led by higher costs for energy. Consumer prices increased 0.6 percent from a year earlier, after rising 0.4 percent in May, the Federal Statistics Office in Neuchatel said today. Economists had forecast an inflation rate of 0.7 percent, a survey showed. “I suspect that that the Swiss National Bank, especially, will breathe a sigh of relief, in knowing that inflation didn’t surge higher,” wrote Peter Rosenstreich, chief foreign-exchange analyst at Swissquote Bank SA in Geneva, in an e-mailed note. “Adding an interest rate kicker to a rallying Swiss franc would be like throwing fuel on a fire, with interest-rate differential and safe-haven seekers flooding back into the franc.” The franc declined 0.5 percent to 84.34 centimes per dollar, after appreciating to as much as 83.80. To contact the reporter on this story: Lucy Meakin in London at lmeakin1@bloomberg.net. To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

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