European Central Bank President Jean-Claude Trichet said on Monday that the bank is currently concerned about excessive movements in currency exchange rates which are undesirable for economic growth.
Trichet also said after talks with other central bank governors that policymakers must stay alert and anchor inflation expectations in a highly volatile financial market which is undergoing a correction.
In remarks which pushed the euro sharply lower against the dollar, Trichet noted that the U.S. policy of favouring a strong dollar.
"Excessive volatility and disorderly movement in exchange rates are undesirable for economic growth," he told a news conference, stressing that he was speaking as ECB chief rather than summing up Monday's meeting in Basel.
"In present circumstances we are concerned about excessive exchange rate moves," he said. "I have noted with extreme attention the statement of the U.S. authorities reaffirming that a strong dollar is in the interest of the U.S. economy."
The euro has soared against the dollar over the past week, hitting an all-time high near $1.5460 as fears of a U.S. recession and more Federal Reserve interest rate cuts grew.
The euro has risen 5.2 percent against the dollar since the start of the year.
Summing up talks among central bank officials from developed and emerging economies, Trichet -- chairman of the bi-monthly Global Economy Meeting -- said a significant market correction with high volatility was persisting.
"At a global level, the alertness of central banks was very important, as always but of course also in present circumstances," Trichet said.
"It was important that we would continue to be solid anchors of inflationary expectations ... and also of course taking the position that would permit the anchoring of the very short term interest rate on the money market.
That would help the money market to work as orderly and as properly as possible."
"We are in close contact," Trichet added.
Money markets are showing renewed stress in the euro zone and the United States, pushing up the cost of money in the interbank market.
At their November meeting central bankers agreed a plan to inject billions of dollars of liquidity into the money markets.
Trichet said central bankers are coordinating under the existing framework but had held no technical discussion on new plans.
Central bankers had no different economic analysis now compared with the last time they met in January and would stick to International Monetary Fund forecasts of world growth this year which take into account an expected slowdown.
The IMF downgraded its forecast for world growth in January to 4.1 percent from 4.4 percent previously, blaming the weak outlook in the United States and Europe.
Trichet said risks to the global economy included high oil, energy, commodity and agricultural prices, as well as disorderly unwinding of global imbalances.
The Global Economy Meeting (GEM), held at the Bank for International Settlements, is attended by central bank governors of major industrial and emerging market economies.