Schroeder is unhappy with the strength of the euro

Speaking to the Financial Times he said the current dollar-euro exchange rate was "not satisfactory" for Europe.

While saying he respected the ECB's independence, he said he believed it would be looking at a possible change in interest rates.

Mr Schroeder made his comments ahead of talks with US President George W Bush.

Expensive exports

They appeared to have an immediate effect on the currency markets, helping the euro fall against the dollar in early Wednesday trading in the Far East, where one euro was worth $1.2498.

I can imagine...there will be some consideration about whether [euro] interest rates are at the right level Gerhard Schroeder

This compares with recent highs of above $1.29.

The UK pound was trading at $1.8745, just below recent levels.

"The dollar-euro exchange rate, at least for the Europeans, is not satisfactory," Mr Schroeder told the Financial Times.

"I would just say that I believe the European Central Bank has recognised that this relationship between the euro and the dollar is not helping the export sector, to put it very mildly.

French backing

"I can imagine that as a result, with all due respect for the independence of the ECB, there will be some consideration about whether [euro] interest rates are at the right level."

Schroeder's opinions were later backed up by French Prime Minsiter Jean-Pierre Raffarin.

Mr Raffarin said he "shares the view" that the Euroopean Central Bank should consider cutting interest rates.

The current excahnge rate between the dollar and the Euro is "not good for either the US or Europe," Raffarin said.