FRANKFURT, GERMANY - The euro zone's top economic policymakers on Tuesday backed comments by US Federal Chairman Ben Bernanke about the importance of a strong dollar, helping to stress international concern about the US currency.

European Central Bank President Jean-Claude Trichet said a sound US currency was in the interests of the entire international community - a change in tone from his usual stance that a strong dollar is in the interests of the United States.

Bernanke's comment on Monday that the Fed is closely watching the dollar - which helped to buoy the greenback against other major currencies - was 'very important", Trichet told a Euro Finance Week function.

'We are fully aligned in this analysis,' Trichet said. 'I believe that the strength of the dollar within the set of floating currencies is in the interest not only of the United States, but of the entire international community.'

Eurogroup chairman Jean-Claude Juncker, who heads the group of euro zone finance ministers, said on the sidelines of the same event that Trichet was 'perfectly right' to highlight Bernanke's comments, which some took to mean the Fed fears a weak dollar could stoke inflation.

'We think, like our American friends, that the strong dollar is in the interest of the US economy,' Juncker told reporters, although he did not believe the euro level was worrying.

'I don't think we have reached the exchange rate level that harms the European recovery but one has to note that this volatility we have experienced for the last weeks and months is not welcome,' the Luxembourg prime minister said.

Bernanke surprised investors on Monday when he said the central bank was 'attentive to implications of changes in the value of the dollar,' in rare comments about the currency which caused investors to cut bets against the dollar.

The US currency has in the last few weeks dropped to 14-month lows against the euro, amid concern about the weakness of the US economy and the US budget and trade deficits. Partly in response to Bernanke's comments, the dollar rebounded on Tuesday to around $1.4850 against the euro from its close of $1.4971 on the previous day.

POLICY

Few analysts think the ECB or other central banks are likely to intervene in the foreign exchange market any time soon to support the dollar and cap the euro. However, exchange rate considerations could conceivably come to affect the ECB's interest rate policy.

The euro could strengthen further against the dollar, hurting European exports, if the ECB starts withdrawing its monetary support for the economy before the Fed, although neither central bank appears to be in a rush.

Trichet on Tuesday confirmed the analysis which the ECB gave following its November interest rate meeting, when the central bank left rates on hold at a record low of 1 per cent.

Inflation pressures were expected to remain low over the medium term, while inflation expectations were well anchored. 'Our assessment is therefore that the current stance of monetary policy, which encompasses both very low interest rates and a series of non-standard measures, remains appropriate,' he said.

'Monetary policy thus continues to support the availability of liquidity in the financial system and the recovery of the euro area economy. Having said this, improved conditions in financial markets imply that not all of our non-standard measures will be needed to the same extent as before.'

The latest information continued to signal an improvement in the economy in the second half of 2009.

'Although this outlook remains subject to a high degree of uncertainty, we expect the euro area economy to recover at a gradual pace in 2010,' he said.