GENEVA, May 13: The depreciation of the dollar is still within “orderly” limits but any acceleration in its decline should trigger an international reaction, the managing director of the International Monetary Fund (IMF) Horst Koehler said on Tuesday.

Koehler was speaking to journalists after a meeting at World Trade Organisation (WTO) headquarters here with the director-general of the WTO, Supachai Panichpakdi, and the president of the World Bank, James Wolfensohn.

“Up to now the depreciation of the dollar is still orderly, is related economically to the current accounts deficits and is so far economically no surprise,” Koehler said.

However, the top IMF official warned that an acceleration in the decline of the dollar would “need to trigger discussion and decision by major countries.”

The US currency’s sharp fall in recent months has led to speculation that Washington might be tacitly abandoning its strong dollar policy, perhaps in an attempt to boost domestic growth ahead of the November 2004 presidential election.

Koehler said he did not want to see “a free fall” of the dominant US currency.

“I just hint to the possible need to do something if it would go out of control. We should not exaggerate this development or even dramatize it,” he added.

The IMF chief insisted that productivity levels in the United States and the “flexibility” of the US economy over the past year “should tell us that we should not write off the dollar”.

The euro was wavering around the 1.15-dollar mark on Tuesday following reported comments from US Treasury Secretary John Snow indicating that Japan and Europe should not blame a weaker dollar for their economic woes, and questioning the value of official intervention in currency markets.—AFP