Feb. 18 (Bloomberg) -- The euro rose to a record against the dollar in London after European Central Bank council member Guy Quaden became the latest policy maker to suggest the bank isn't ready to halt the currency's rally. Quaden told a news conference in Brussels a further rise in the euro wouldn't be welcome, though policy makers have no ``pain threshold.'' ECB President Jean-Claude Trichet said on Monday interest rates are ``appropriate,'' indicating he will ignore calls to brake the dollar's slide.
``The ECB probably won't stop it, either by selling euros or cutting rates,'' said Kenichiro Ikezawa, who helps manage $1 billion of overseas debt at Tokyo's Daiwa SB Investments Ltd. ``There is no sign they are ready or willing to take action.'' Against the dollar, the euro traded at $1.2889 at 7:55 a.m. in London from $1.2842 late yesterday in New York, according to EBS prices. The previous record was $1.2899 on Jan. 12. The euro rose as high as $1.2930 and has climbed 20 percent versus the dollar in the past 12 months. The dollar also weakened to $1.9100 against the pound, the lowest in more than a decade. The Australian dollar, the best performing currency against the dollar in the past year, rose to 80 cents for the first time in seven years. ``It's going to get worse before it gets better,'' said Jake Moore, a currency strategist in Tokyo at Barclays Capital Inc. ``There's no reason to think this is the bottom for the dollar.''
Quaden's comments are published a day after Belgian Finance Minister Didier Reynders said he would only be concerned about the currency's gain if it was ``well above'' the current level. Demand for the dollar has waned as the U.S. Federal Reserve has kept its target rate at 1 percent, a four-decade low. Trichet on Monday the bank's benchmark rate of 2 percent, twice the Fed's target, as ``historically low.''
Japan Sells Yen
In other trading, the yen was little changed against the dollar after the Bank of Japan sold the currency to prevent it from rising after a government report said the world's second- largest economy expanded at its fastest pace in 13 years. The yen was trading at 105.60 per dollar at 7:03 a.m. in London, from 105.66 yesterday. It was at 135.90 per euro from 135.70. Japan's economy grew at a 7 percent annual rate in the three months ended Dec. 31, the Cabinet Office said, compared with a 4.7 percent median forecast in a Bloomberg News survey and 4 percent expansion for the U.S. last quarter. The BOJ sold yen at about 105.60 per dollar several times after the report, said traders who deal with the bank and asked not to be named. ``The BOJ is not going to back off yet,'' said Naomi Fink, currency strategist in Tokyo at BNP Paribas SA.
`Actions Speak Louder'
Japan sold a record 7.15 trillion yen ($67.7 billion) in the four weeks through Jan. 28. The government spent 20.4 trillion yen last year, five times the amount sold the previous year. ``Actions speak louder than words and the Bank of Japan is spending billions a month and the ECB is just talking,'' said Aziz McMahon, a currency strategist at ABN Amro Holding NV in London. ``It's a pretty easy choice to make'' for a trader. Unlike the BOJ, the ECB hasn't bought or sold euros since 2000 when it purchased the currency. ``There is no exchange rate at which things change completely, or a threshold at which the pain becomes unbearable,'' Quaden said. //www.bloomberg.com