Mr Paulson expects currencies to be on the agenda in Cape Town

Finance ministers and central bank governors are likely to voice their concern about the accelerating decline of the dollar on international markets.

European leaders are worried that they are bearing the main burden of adjustment as global imbalances unwind.

They will join the US, which has long argued that China needs to revalue in order to reduce its huge trade surplus.

Although China has agreed a limited float of its currency, the yuan, it has been the euro and the pound that have soared against the dollar, putting pressure on European exporters.

A higher yuan would make Chinese goods more expensive in Europe and America, thus reducing China's trade surplus.

From some time, the US has been expressing concern about currency and trade imbalances as the US dollar has tumbled to historic lows.

But this would be the first time that European finance leaders have publicly joined in the criticism.

G20 Summit

But co-ordinated action to strengthen the dollar is seen as unlikely, as the G20 summit of rich and poor countries has no executive powers.

The G20 includes most of the world's richest nations, the European Union and developing economies including Brazil, Argentina, India, Mexico and Indonesia.

The other G20 countries due to attend the summit on Saturday and Sunday are Australia, Canada, China, France, Germany, Italy, Japan, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the UK and the USA.

Analysts said the meeting would also cover the continuing impact of problems in the world's credit markets.

Historic lows

US Treasury Secretary Henry Paulson, whose job has seen him focusing on the weakness of the dollar and strength of the Chinese yuan, said on Thursday that he expects currency issues to be discussed at the summit.

Bank of England governor Mervyn King has also expressed concerns about currency tensions this week.

What we could hope for is an increased sense of urgency with respect to addressing issues related to global imbalances Canadian Finance Minister Jim Flaherty

On Wednesday, Mr King said that the difficulty with the global economic system at present was that a number of the world's largest and most-developed nations have flexible exchange rates.

However, other nations such as China link their currency to the dollar and "that's causing great currency tensions", Mr King said.

At the same time, US interest rates have been falling, further weakening the dollar and strengthening currencies in nations where borrowing costs are higher.

Investors typically buy assets and currencies where the rates of return are higher.

As a result, the euro and UK pound have climbed to record levels against the dollar, raising fears that British and European products will become too expensive for foreign buyers and exports will suffer.

Other nations have also complained that the weak US dollar makes it difficult for their companies to compete.

Concrete action?

In recent months, China and its yuan have been singled out for particular criticism.

The yuan, which is not allowed to float freely, has appreciated recently against the dollar, but not as much against other currencies, creating greater imbalances, analysts said.

"We've seen the turbulence happen in market currencies and that's significantly attributable to intransigence and inflexibility among certain Asian currencies, especially China's, and of course weakness in the US dollar," said Canadian Finance Minister Jim Flaherty.

But Mr Flaherty played down hopes of unified action on currencies from the G20.

"Realistically, I don't expect any concrete unified action, I think that would be an unrealistic expectation," he said.