The head of the European Central Bank (ECB) warned Thursday of the risk that "disorderly" shifts in exchange rates could harm a fragile global economy.
The comment came as exchange rates have taken center stage in financial markets, with investors worried about the possibility of "currency wars," in which nations try devaluation as a way to bolster exports.
The issue will also be a major one as global finance officials meet at Friday's annual meeting of the International Monetary Fund (IMF) in Washington.
Several forces are roiling currency markets and sending up the price of gold – a hedge against currency volatility.
The US Federal Reserve appears ready to embark on a policy of "quantitative easing," an effort to inject money into the economy by purchasing bond assets. That could fan investor worries about inflation and push the US dollar down.
Some emerging economies and Asian nations, meanwhile, are struggling to prevent a rise in their currencies in exchange markets. From Japan and South Korea to Brazil, actions by central banks amplify the "currency war" threat.
The hope, as Mr. Trichet hinted, is that these problems can be resolved in an orderly way.
IMF chief Dominique Strauss-Kahn made a similar point Thursday. "I take very seriously the threat of a currency war, even a nascent one," he said in an interview published in Friday's edition of French newspaper Le Monde.
So far, some economists are skeptical that the threat will result in a 1930s-style crumbling of global commerce.
"It is all very unsettling," wrote economist Ed Yardeni in a report for investor clients last week. But "even during good times, there are protectionist flare-ups as domestic industries lobby their governments to protect them from unfair foreign competitors. I'm not convinced that we are seeing much more than is the norm."
Investors have been bidding up the price of emerging-market currencies, because many of those nations have been showing stronger economic growth than the US or Europe. Investment capital has been flowing into the emerging markets, yet they are wary of seeing the value of their currencies pushed too high.
Behind this near-term trend, though, are deep trade tensions – especially over China and allegations that it has kept the yuan artificially weak.
The US and Europe say this is costing them exports and jobs, and now high unemployment is fueling a new push for concessions from China. Earlier this year, Beijing pledged to allow the yuan to rise somewhat.
Last week, the US House of Representatives passed a bill to penalize China with countervailing duties on its exports to America unless it lets the yuan rise faster. Senate action on the bill is uncertain, but at a minimum the House vote sends a symbolic warning to China regarding American public opinion.
For its part, China has recently clamped down on exports of valuable "rare earth" commodities, which are sensitive because of their use in high-tech and defense-industry products.
During the 1930s, currency devaluations and protectionist trade barriers took a heavy toll on the global economy, deepening the Great Depression. In the financial crisis that erupted in 2008, world leaders largely avoided the protectionist path.
Now, despite a nascent economic recovery, the threat of currency or trade wars appears stronger. High unemployment is one driving factor, along with the goal of "rebalancing" the world economy with more exports for the US (a trade-deficit nation). That would be complemented by more emphasis on domestic consumption by export-focused nations such as China.
Economists at Morgan Stanley, in a report Wednesday, argue that a damaging "currency war" is not under way – at least not yet. They say emerging-market nations are focused in-part on domestic monetary concerns, such as watching against inflation, while also trying to rebuild depleted foreign-currency reserves.
Even a mini-war over currencies wouldn't be so bad, they add, if it serves as a subsitute for a trade war involving rising tariffs and quotas on the shipment of goods. The big danger would be if nations escalated fights on both those fronts.
Material from the Associated Press was used in this report.