Markets will be keeping a close eye on this Saturday's meeting of finance ministers from the Group of Seven leading industrial nations to see if they go beyond the normal platitudes about currencies and try to support the dollar, which has been sold off heavily in recent weeks.

The dollar has been in focus since figures earlier this week from the International Monetary Fund showed that its share of total reserves has fallen to its lowest level since 1995 and the head of the World Bank warned that its status as the world's leading reserve currency should not be taken for granted.

The figures tapped into a feeling that the dollar's central position in the international monetary system was in long-term doubt, and that further declines in its value could threaten the fledgling global economic recovery. The worries are in part based on much larger U.S. budget deficits and expansive monetary policy at the Federal Reserve, including rock-bottom interest rates and expansion of the money supply.

Neil Mackinnon, global macro strategist at VTB Capital in London, said it's "highly likely" that the finance ministers, including the U.S. Treasury Secretary Timothy Geithner, will try and talk up the U.S. currency. The dollar earlier this week fell to an eight-month low against the Japanese yen and is not that far away from one-year lows against the euro.

On Thursday the dollar rose about a cent against the euro, which reached $1.4536. The dollar was unchanged against the yen on the day at 89.59 yen.

"It's in the Americans interest as well to have a stable currency," said Mackinnon. "A dollar crisis is the last thing anyone needs."

A falling dollar hits exporting countries as they will find it more difficult to sell their products to the U.S. and raises the cost of commodities such as oil, which are priced in the U.S. currency _ potentially putting a break on global growth, which the IMF earlier said was fragile.

For some countries, the dollar's fall appears to have gone too far _ earlier there were unconfirmed reports that the South Korean monetary authorities intervened in the markets to reduce the value of the won. EU officials are edgy about a too-strong euro, which hurts their exports.

Regardless of whether the G-7 finance ministers actually take verbal steps to support the dollar, the currency's long-term status as the world's reserve currency is clearly under the spotlight.

Earlier this week, World Bank president Robert Zoellick cautioned U.S. authorities against assuming the dollar would maintain its role as the world's reserve currency as they deal with the fallout from the financial crisis and the deepest recession since World War II.

Zoellick said other currencies such as the euro and the Chinese yuan could win increasing acceptance in international currency markets. The U.S., he said, "would be mistaken to take for granted the dollar's place as the world's predominant currency. Looking forward there will increasingly be other options to the dollar."

"The future for the United States will depend on whether and how it will address large deficits, recover without inflation that could undermine its credit and currency, and overhaul its financial system.," Zoellick told an audience at Johns Hopkins University in Washington, D.C. on Monday.

The IMF figures provided evidence that changes are afoot _ they showed that the dollar accounted for 63 percent of total allocated currency reserves in the second quarter, down from 65 percent in the previous three months, while the euro's share of reserves rose to 27 percent from 26 percent.

Not everyone is pessimistic about the dollar's medium-term prospects.

James Lord, international economist at London-based Capital Economics, said that the dollar remains the world's dominant reserve currency and that the drop identified by the IMF "greatly exaggerates the extent to which reserve managers are losing faith" in the U.S. currency.

Lord said the dollar's actual fall in value on the foreign exchange markets may account for the decline in its total share as opposed to any loss of faith on the part of currency managers.

He also noted that there are few, if any signs, that China _ the world's largest holder of dollar reserves _ is turning its back on the dollar even though government officials have voiced concerns, on occasion, about the dollar's long-term status in the wake of its fall in value, particularly against the euro.