  We present the detection of carbon monoxide molecules (CO) at z=1.6408
towards the quasar SDSSJ160457.50+220300.5 using the VLT Ultraviolet and Visual
Echelle Spectrograph. CO absorption is detected in at least two components in
the first six A-X bands and one d-X(5-0) inter-band system. This is the second
detection of this kind along a quasar line of sight. The CO absorption profiles
are well modelled assuming a rotational excitation of CO in the range 6<Tex<16
K, which is consistent with or higher than the temperature of the CMB radiation
at this redshift. We derive a total CO column density of N(CO)=4e14 cm^-2. The
measured column densities of SI, MgI, ZnII, FeII and SiII indicate a dust
depletion pattern typical of cold gas in the Galactic disc. The background
quasar spectrum is significantly reddened (u-K~4.5 mag) and presents a
pronounced 2175 A dust absorption feature at the redshift of the CO absorber.
Using a control sample of ~500 quasars we find the chance probability for this
feature to be spurious is ~0.3%. We show that the SED of the quasar is well
fitted with a QSO composite spectrum reddened with a LMC supershell extinction
law at the redshift of the absorber. It is noticeable that this quasar is
absent from the colour-selected SDSS quasar sample. This demonstrates our
current view of the Universe may be biased against dusty sightlines. These
direct observations of carbonaceous molecules and dust open up the possibility
of studying physical conditions and chemistry of diffuse molecular gas in high
redshift galaxies.
