The embattled dollar may claw back some of its recent sharp losses after the Group of Seven leading economies fired a surprise weekend warning shot at foreign exchanges over their assault on the greenback.

In the first significant shift in their stance on exchange rates for at least four years, the G7 finance ministers and central bank governors used a big change in their usual boilerplate language on currencies to warn markets that the dollar should not be seen as a “one-way bet”.

“Since our last meeting there have been sharp fluctuations in leading currencies and we are concerned about their possible implications for economic and financial stability,” the G7 said in its communiqué, before adding its usual pledge to monitor exchange markets closely, and co-operate as appropriate.

The change in language carried the implied threat that G7 central banks and governments could wade into markets to punish speculators should volatile currency moves they see as excessive persist.

The shift was seen as a concession by Washington to eurozone governments, which have voiced growing dismay over the relentless rise in the euro to record levels triggered by the plunge in the dollar's value.

Since early this year the euro has soared nearly 10 per cent against its US rival to levels above $1.59, while the dollar has also sunk nearly 11 per cent against the Japanese yen.

Currency strategists said that the G7's move was likely to give a modest boost to the dollar and weaken the euro in the short term. Eurozone policymakers were pleased with the shift in G7 stance. “This change shows a concern not seen for years,” Tommaso Padoa-Schioppa, the Italian Finance Minister, said.

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