March 7 (Bloomberg) -- The euro rose from near the lowest level in almost three months against the dollar after the European Central Bank refrained from cutting its benchmark interest rate at a policy meeting today.
The common currency advanced versus 13 of its 16 major counterparts after Spain exceeded its maximum target at a bond auction and Standard & Poor’s raised Portugal’s credit-rating outlook. The pound strengthened against the dollar after the Bank of England left its debt-purchase program unchanged. Sweden’s krona climbed to the strongest level against the euro since August after the central bank governor signaled policy makers will tolerate further gains.
“No change in ECB rates was the consensus view,” Jane Foley, a senior foreign-exchange strategist at Rabobank International in London, said before the announcement. “We might see a small uptick in the euro but I don’t think it will have a big impact.”
The euro rose 0.5 percent to $1.3036 at 12:46 p.m. London time after falling to $1.2965 yesterday, the lowest level since Dec. 11. The single currency gained 0.8 percent to 122.90 yen after rising 0.2 percent yesterday. Japan’s currency fell 0.2 percent to 94.30 per dollar.
The ECB kept its benchmark rate at a record low of 0.75 percent as forecast by 56 of 61 economists surveyed by Bloomberg News. Five predicted a reduction to 0.5 percent. ECB President Mario Draghi will hold a press conference 2:30 p.m. in Frankfurt to explain the decision.
‘Consensus View’
The euro rose in earlier trading after Spain sold 5.03 billion euros of bonds, surpassing its target of 5 billion euros. The Madrid-based Treasury auctioned 10-year securities at an average yield of 4.917 percent, down from 5.20 percent at the previous sale on Feb. 21.
S&P raised Portugal’s credit-rating outlook to stable from negative, saying European institutions will probably extend their support of the government. The company affirmed the country’s BB long-term rating in a statement released today.
“The key really is that S&P is leading the other two ratings agencies with this move, so that, at the margin, helps with euro sentiment,” said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong.
The euro has appreciated 1.4 percent this year according to Bloomberg Correlation-Weighted Indexes, which track 10 developed-nation currencies. The dollar gained 2.7 percent and the pound tumbled 5.6 percent.
Pound Gains
The pound reversed earlier losses versus the dollar after the Monetary Policy Committee held its asset-purchase target at 375 billion pounds ($565 billion), as forecast by 29 of 39 economists surveyed by Bloomberg. Ten predicted an expansion.
“Clearly not all members of the MPC are on the same page yet and some hawkishness remains,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. in London, before the decision. “The pound will advance initially.”
The pound rose 0.3 percent to $1.5064 after earlier dropping to $1.4967, the weakest since July 2010. Sterling declined 0.2 percent to 86.50 pence per euro.
The krona strengthened at least 0.3 percent versus all 16 of its major counterparts after Riksbank Governor Stefan Ingves told Swedish lawmakers that the currency’s level was “not in any way remarkable.”
Sweden’s currency has appreciated over the past month after economic data have suggested the recovery is gaining pace and as policy makers have signaled they won’t interfere with the krona’s advance.
The krona gained 0.4 percent to 8.3007 per euro after appreciating to 8.2931, the strongest level since Aug. 28.
Yen Weakens
The yen dropped for a second day against the euro even after the Bank of Japan rejected a call for an immediate start to open-ended asset purchases in Governor Masaaki Shirakawa’s final meeting before he is replaced by Haruhiko Kuroda.
The board voted eight-to-one against the proposal by member Sayuri Shirai, the BOJ said in Tokyo. Policy makers left an asset-purchase fund unchanged at 76 trillion yen as forecast by all 23 economists in a Bloomberg News survey.
“It’s becoming clear that powerful monetary easing by the BOJ under Kuroda would support yen weakness,” Yunosuke Ikeda, head of foreign-exchange strategy at Nomura Securities Co. in Tokyo, wrote today in a note to clients.
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