BERLIN, Dec 30 - Finance Ministers from the Group of Seven richest nations will discuss the dollar's weakness when they next meet in February, as European nations become increasingly worried by its slide, a G7 source told on Tuesday. A euro level clearly higher than $1.20 could not be good for Europe's economy, while a level of $1.30 represented a "pain barrier", the source said. A stronger single currency , which crossed the $1.25 barrier for the first time on Monday, can erode the euro zone's competitiveness by making goods produced there more expensive to customers outside the 12-nation region.
But the United States should also not be happy with a sharply weaker dollar which could lead to a flight of capital from the country, depressing stock markets and pushing up long-term interest rates, the source said. G7 finance ministers will begin a two-day meeting in Boca Raton, Florida, on February 6. The euro fell slightly after the source's comment but quickly recovered to stand just below this week's record high around $1.2511. "It's probably just another German moaning which is why the market isn't paying much attention," said Julian Jessop, chief European economist at Standard Chartered in London. "There is no doubt that some European politicians and central bankers are concerned about the euro's strength, but I doubt the U.S. will care what the Europeans say. The Germans might want to discuss the euro but it is unlikely the Americans will." The euro's value has risen nearly 20 percent this year. The German government said on Monday it was relaxed about the level of the euro, adding German exporters were extremely competitive. However, a senior ECB policymaker was quoted on Monday as saying the European Central Bank was growing increasingly uneasy that euro strength could undermine recovery in the bloc. Dealers suspect the Bank of Japan intervened in the currency markets on Monday and expected further action if the dollar fell towards 106.74 yen, the three-year low hit on December 9. Sterling was trading close to this week's 11-year high against the dollar on Tuesday.//www.s.com