Mr Horst Kohler, the International Monetary Fund (IMF) managing director, called yesterday for a global economic strategy to cope with volatility in foreign exchange markets and avoid placing an undue burden on any one currency area.
Mr Kohler, speaking at a conference in Prague a few days before a Group of Seven (G7) meeting in Florida at the weekend, said imbalances in the global current account remained a risk to an economic recovery that was just starting to broaden.
Although a stronger euro and weaker dollar were helping to facilitate current account rebalancing, he said a strategy must be devised as soon as possible to ensure sustainable growth.
European government officials have all but abandoned hopes that the G7 meeting can deliver a strong statement on the risks of exchange rate volatility.
Finance ministers and central bankers from the world's richest nations are meeting at Boca Raton, Florida, amid mounting concern over the strength of the euro. US participants are expected to resist pressure to support a rise in the dollar ahead of a presidential election this year.
Instead, hopes in Europe are turning towards a statement that would urge China and other economies in the region to share the burden of the dollar's weakness, the brunt of which has so far been borne by the euro zone.
A clash is likely on the US budget and current account shortfalls. Europeans see the swelling twin deficits as a mounting threat to the world financial system's stability and the main cause of the dollar's weakness. Foreign exchange traders are predicting a turbulent week for currencies in the run-up to the meeting.
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