Asked by the Salzburger Nachrichten about the rise in the euro, Nowotny said he saw no justification in talking of a "currency war" and said exchange rates were within historical ranges.

"They are a sensitive element in economic events, so it is sensible to watch them. But I see no need to act at the moment. One should take the drama out of the whole thing.

"But if developments become more strongly accentuated then one would have to speak about this," he said in an interview to be published on Thursday.

Currency markets were thrown in to turmoil on Tuesday after a day of mixed messages about exchange rates, prompted by Japan's new government pressing for an aggressive expansion of monetary policy, which has seen the yen weaken sharply.

G7 nations - Britain, the United States, Japan, Germany, France, Italy and Canada - said fiscal and monetary policies must be directed at domestic economies and not at targeting exchange rates.

Nowotny, head of the Austrian central bank and a member of the ECB's governing council, said the euro's exchange rate was of relevance only as a factor in maintaining price stability.

"In concrete terms this means to what extent it comes to deflationary tendencies when (the currency) rises. I do not see this at the moment," he said. He also saw no signs of inflationary danger for the euro zone, he told the paper.

Asked if central bank intervention was unnecessary, he said: "History teaches that effective measures have to be coordinated. But I see no reason and no necessity for this now."

Nowotny said markets were anticipating the euro zone would stabilise now that expectations that the currency bloc could collapse had disappeared.

But he added: "There are still problems with some banks that need public support. Problems in individual countries, like in Cyprus, could always crop up."

He said the euro zone as a whole still had too little economic growth and the state of public finances in many countries was "unsatisfactory".