The pound rose for the first time in five days after a Bank of England official said in a newspaper interview that he expects interest rates to rise. The British currency rebounded from near a three-month low after BOE Markets Director Paul Fisher told the Daily Telegraph the U.K.’s borrowing costs will “head back to a normalized position” of 5 percent. The yen gained for a fourth day versus the dollar, its longest streak since Oct. 8, on signs China is taking more measures to cool growth. New Zealand’s currency surged as Finance Minister Bill English said the nation’s economic expansion will accelerate next year. “Rate hikes from the BOE seem possible,” said Norifumi Yoshida, vice president of the trading section in Singapore at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest banking group. “This is causing buying of the pound.” The pound advanced to $1.5424 at 6:42 a.m. in London from $1.5386 in New York yesterday, when it fell to $1.5356, the lowest level since Sept. 14. The euro increased to $1.3133 from $1.3100, after touching $1.3074 on Dec. 21, the weakest since Dec. 2. The yen rose to 109.16 per euro from 109.47, after advancing earlier today to 108.92, the strongest since Dec. 1. The yen climbed to 83.12 per dollar from 83.57 yesterday and reached 83.07, the strongest since Dec. 14. New Zealand’s dollar rose to NZ$1.3439 per Australian dollar from NZ$1.3489 yesterday, when it reached as low as NZ$1.3521, the weakest since September 2000. BOE Policy The BOE won’t “be putting up rates so quickly” as to cause “negative reaction” and will only tighten policy quickly if the strength of the economy demands it, Fisher said, according to the newspaper. Bank of England policy makers were split three ways for a third month on the need for economic stimulus as some officials became more concerned that inflation may persist. Adam Posen kept up his demand to increase the 200 billion- pound ($308 billion) bond-purchase plan by 50 billion pounds, according to minutes of the nine-member Monetary Policy Committee’s Dec. 9 decision released yesterday in London. Andrew Sentance voted to raise the interest rate for a seventh month and the rest ensured no change in policy. The pound was at 85.17 pence per euro from 85.14 yesterday. Japan’s currency strengthened against 15 of its 16 major counterparts after China’s benchmark money-market rates surged to the highest level since October 2007. ‘Monetary Tightening’ “The surge in money-market rates may reflect monetary tightening in China,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “This seems to be sparking risk aversion. The bias is for the yen to be bought.” Gains in the euro were tempered on concern European banks and nations will need to raise more funds. Europe’s currency is heading for a weekly loss against 14 of its 16 major counterparts as the European Central Bank will lend banks 149.5 billion euros for three months to meet their liquidity needs over the year-end period. “When you start to stare in the face of funding requirements out of the euro nations, the ones that are in trouble in particular, that can’t help an already poor situation,” said Alex Sinton, a senior currency dealer at ANZ National Bank Ltd. in Auckland. “The bias has got to be on the downside for the euro and the upside for the dollar.” The ECB said yesterday 270 banks asked for the unlimited funds over 98 days, which will be loaned at its average benchmark interest rate over the period. Banks today need to repay 96.9 billion euros in maturing 12-month loans and 38.2 billion euros in three-month loans tomorrow. Poland Funding Poland is seeking to replace its $21 billion credit line at the International Monetary Fund with a two-year, $29 billion one, John Lipsky, the IMF’s No. 2 official, said yesterday. New Zealand’s currency rebounded from an early decline after a government report showed the economy shrank 0.2 percent in the three months to Sept. 30, compared with a median estimate for 0.1 percent growth. “I’ve said all along this recovery would be a bit bumpy at times and that’s proved to be the case,” Finance Minister English said in an e-mailed statement. “The recovery remains on track. I am quite confident the economy will build momentum in 2011 and beyond.” Taiwan’s dollar gained as economists surveyed by Bloomberg News said industrial production rose 12.5 percent in November from a year earlier. The currency was also supported after jobs data, announced toward the end of trading yesterday, which showed the unemployment rate fell to a two-year low of 4.79 percent in November. This was below the median estimate of 4.9 percent in a Bloomberg survey. “The economy is doing well and that supports the Taiwan dollar,” said Tarsicio Tong, a Taipei-based currency trader at Union Bank of Taiwan. “Volumes are thin these days,” he said. The Taiwanese currency appreciated 2.6 percent to NT$29.825 against its U.S. counterpart, according to Taipei Forex Inc. It reached NT$29.766 on Dec. 17, the strongest since October 1997. To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net To contact the editor responsible for this story: Rocky Swift at rswift5@bloomberg.net

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