This could result in "excessive movements" in currencies becoming a risk themselves, he said.
"This (the strong dollar) is a key issue and I don't think this is an issue that the markets or the policy makers have understood enough as yet—we have gone from a world where there was relative harmony in what central banks were doing—to a world where there was diverging direction and for good reasons: the economies are doing different things," he told CNBC on Friday.
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"If the other parts of the policy apparatus do not respond, then the only market that accommodates these divergent trends is the currency markets. I could tell you that, as someone who participates in the markets, this poses a threat to volatility and market soundness as a whole and the sorts of excessive movements that may result in currencies becoming a risk themselves to economic recovery," he added.
El-Erian's comments come as the the Russian rouble tumbled to new lows on Friday before bouncing back. The rouble hit its weakest-ever level against the U.S. dollar early on Friday, sliding to 48.6, before recovering to trade at 46.2 within a few hours—1.3 percent higher on the day.
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The dollar has gained against rival currencies, most notably against the euro and the yen, as a result of the divergence in monetary policy between the U.S. and other nations.
The Federal Reserve is winding down is quantitative easing (QE) program, which strengthens the dollar, as does the anticipation of higher interest rates, which will attract investors.