The European Central Bank has raised interest rates, as expected, by a quarter percentage point to 3.5 per cent.

ECB President Jean-Claude Trichet, when pressed on his views on the euro, which surged recently to 20-month highs against the dollar and fresh life-time highs against the yen, repeated the Group of Seven's stance on currencies stated at its meeting in Singapore earlier this year.

"I stick to what, on behalf of the (ECB) Governing Council, I have signed, with few sentences including the sentence 'excess volatility and disorderly movements in exchange rates are undesirable for economic growth'," Trichet said.

The euro jumped to $1.3340 earlier this week, its strongest level since March last year, driven by narrowing interest rate differentials between the United States and the euro zone, and renewed concerns about central banks diversifying their reserves out of dollars.

But neither the ECB rate rise or Trichet's currency comments on Thursday budged the euro. The common currency did briefly rise back above $1.33 after Trichet said euro zone interest rates remain low, although that rally quickly fizzled out.

Most euro zone finance ministers, with the notable exception of France's Thierry Breton, have expressed little concern with the euro at current levels which are only a few cents away from its $1.3667 record high struck two years ago.

"To some extent ... at current levels, there isn't much concern in the ECB with regards to the euro. That's partly because we've been there before, and because there's been strong improvement in Germany over the past two years with regards to export competitiveness," said Thomas Stolper, currency strategist at Goldman Sachs in London.

"I don't think there's any reason to be any more explicit than they (policymakers) have been since the Singapore meeting," he said.

Stolper said the main concern for Trichet would be that, in the event of a more sustained dollar fall, Asian currencies share the burden of shouldering more exchange rate strength.

The trade-weighted yen is currently mired at its lowest levels in over two decades, and is near record lows against the euro. Yen weakness makes Japanese goods cheaper on international markets.