Shortly after the decision was announced the euro fell below $1.08, a new low. It also closed at a new low of 67.35p, and analysts warned that worries over economic prospects would continue to drive the European currency lower.
ECB president, Wim Duisenberg, said last night that recent falls in the currency in part reflected the buoyancy of the US economy. He said: "I think it is predominantly the strong dollar, not so much the weak euro. Interest-rate differentials may also explain the fall."
Mr Duisenberg said further euro weakness could cause concern and the ECB would continue to monitor developments. However, he dismissed speculation about ECB intervention in the currency markets as "just rumours".
Economists said that the weakness of the European currency was a blessing for exporters in the euro zone. The German government said that a drop in export demand was a key factor behind the country's disappointing fourth- quarter growth of minus 0.4 per cent
A European Commission survey revealed further falls in business confidence on the Continent in February.
Data published by the EU statistics office showed unemployment in the euro zone down to 10.6 per cent, a six-year low.