Exchange rates are "a real problem", with the euro being overvalued and the dollar facing the risk of another fall, European Union Monetary Affairs commissioner Joaquin Almunia said.

"Exchange rates are a real problem," he said in an interview with reporters in Brussels. Excerpts were published in Italy's la Repubblica on Thursday.

The euro last week hit a record high at about $1.6040 and has risen sharply from around $1.4590 at the end of 2007.

"The euro is overvalued while other monies that have an official exchange rate, like the Chinese yuan, are clearly undervalued. Moreover, there is the risk of another fall in the dollar," he said.

Almunia said euro zone countries had to agree to speak with a single voice ahead of the next meeting of the Group of Eight or the International Monetary Fund.

"For our part we are looking for a new meeting with China before the autumn," he said.

Almunia said the first problem to be tackled was inflation. The euro zone's annual inflation rate was 4 percent in June, twice the European Central Bank's (ECB) target of nearly 2 percent.

The ECB raised interest rates to 4.25 percent earlier this month to try to curb inflation. The move has been questioned by French President Nicolas Sarkozy, who has said it could harm economic growth.

Almunia said it was not constructive to criticise the ECB. "Instead of criticising the ECB the governments should help it, because the central bank can't do it by itself," he said.

Governments could help by not raising taxes or salaries for public servants, he said.

In an interview with a Finnish daily on July 18, Almunia said inflation in the euro zone could drop to close to 2 percent next year and he worried about the risk of stagflation. - Reuters