European policy makers voiced growing fears on Tuesday that the dollar's slide against Europe's single currency may jeopardise global recovery. As the dollar traded near record lows against the euro, the European Commission warned that sharp exchange rate moves were bad for growth. It said the issue was certain to figure at next week's meetings of eurozone finance ministers.
In Britain, finance minister Gordon Brown told business leaders the currency gyrations posed yet another challenge to the world economy as it also grappled with high oil prices, trade imbalances and Middle East instability.
"All of you are having to cope with the doubling of oil prices, rising world commodity prices, uncertainty in the Middle East, large current account imbalances between Europe, Asia and America and the changing values of the dollar, euro and pound," he told a business conference in Birmingham, central England.
"And thus (we have) uncertainties about the strength and durability of the world recovery," he added.
His French counterpart Nicolas Sarkozy, also in Birmingham for the same conference, blamed the United States for its huge deficits which are helping drive the dollar down.
Asked by reporters if he was worried by the dollar's fall, Sarkozy replied: "It's not a question of anxiety, it is like I said in Italy yesterday, it's a problem with American deficits and our American friends should reduce it."
He had also seemingly criticised the US over its dollar policy in Rome on Monday, saying the Group of Seven finance ministers' statement made in Florida in February should remain valid.
"The Europeans and Americans jointly signed the Boca Raton G7 statement and we believe that the statement remains valid and I think the United States must remember it," he said then.
The Florida G7 statement said that "excess volatility and disorderly movements in exchange rates are undesirable for economic growth."
German Finance Minister Hans Eichel said last week the G7 would discuss the euro/dollar exchange rate if Europe's single currency continued to strengthen at recent rates.
While no formal meeting of G7 finance ministers is planned for the rest of the year, ministers and central bank governors of the rich nations' club will attend the G20 group of developed and emerging market economies in Berlin on November 19 and 20.