The euro dipped after the comments, helping push the dollar towards its biggest one week gain against the euro in three years.
DOLLAR-OIL NEXUS
Oil prices have rallied in tandem with a slide that has seen the dollar lose nearly half its value against the euro in six years.
"Defence of the dollar has become an urgent issue," Kyodo news agency quoted Japan's Financial Services Minister Yoshimi Watanabe as saying on Friday.
The Dallas Federal Reserve said in a paper last month the U.S. currency's slide had contributed about one-third of a $60 increase in oil prices between 2003 and 2007.
Italy will propose increasing the size of the deposit required to trade oil futures to make speculation more difficult, Economy Minister Giulio Tremonti told reporters.
Anger over oil prices near a record $140 per barrel is spilling on to streets around the world. Trucker strikes turned violent in Spain, Malaysia beefed up security for an opposition rally on Friday and authorities from Thailand to the Netherlands are preparing for protests over rising pump prices.
Those prices are also percolating through the global economy, crimping growth, stoking inflation and dampening consumption. The Bank of France cut its second-quarter economic growth forecast by a third to 0.2 percent on Friday.
The Bank of Japan downgraded its view on exports and corporate profits on Friday over a slowing global economy and rising raw material costs.
Markets have long interpreted U.S. dollar policy as one of "benign neglect" - speaking of the virtues of a stronger currency while profiting from its weakness through export growth.
Last week Federal Reserve Chairman Ben Bernanke flagged a change in Washington by linking the weaker dollar to inflation and saying that he was watching the currency closely with the Treasury. Paulson then refused to rule out intervention.
The last coordinated intervention among G8 states came in September 2000 when the Fed, European Central Bank and Bank of Japan acted to stem the euro's decline.
The G8 groups the United States, Japan, Britain, France, Italy, Germany, Canada and Russia.
