By Anna Willard and Clement Guillou
PARIS, Dec 15 (Reuters) - China's decision to let its currency fall modestly against the dollar in recent days is problematic, Anne-Marie Idrac, France's junior minister in charge of trade told Reuters on Monday.
She said this was much more a problem than the level of the euro against sterling and the U.S. dollar.
"We were pleased to see the gradually fairer development of the yuan in the last few months," she said in an interview.
"Of course the developments in the last few days and weeks are much more problematic than the question of the dollar and the question of sterling."
China caused a stir in financial markets this month by letting its currency fall modestly against the dollar ahead of talks with the United States.
On Friday, however, the central bank reiterated a commitment to long-term currency appreciation.
China's central bank set the yuan's mid-point at 6.8442 to the U.S. dollar on Monday, having steered the currency back from a six-month low of 6.8870 struck earlier in the month.
Idrac played down the importance on French exports of the euro's strength against sterling and the U.S dollar.
Sterling hit a record low against the euro on a trade-weighted basis on Monday of over 90 pence on expectations of lower UK interest rates.
The euro also gained against the U.S. dollar on Monday as investors continued to exit long dollar positions amid uncertainty over the face of U.S. automakers.
The euro climbed to intra-day peaks at $1.3607
"Some people thought for a long time that we had a very big problem with the level of the euro in relation to the dollar. In reality, as two thirds of our exports are done within the euro zone, this dollar question must be put into perspective," Idrac said.
"Likewise, despite the importance of the British market, the question of the pound also needs to be put into perspective. A much bigger question is the problem of the Chinese currency."
France's trade deficit ballooned to record levels in October as demand for its exports such as cars and steel-based products fell in its core European markets.
The deficit for France -- the world's fifth-largest exporters, according to 2007 figures -- ballooned to 7.066 billion euros ($9.08 billion) against a revised 5.961 billion euros in September.
Exports fell to 32.564 billion euros from 34.089 billion in September.
"As far as exports are concerned, (it is due to) the drastic fall in demand of our main clients, which are Germany, Spain and other European countries as well as the United States," she said.
The government is forecasting a deficit of 55.2 billion euros for this year, far larger than the previous record, set in 2007 of 39.4 billion euros.
The cumulative deficit reached 46.25 billion euros between January and October.
Asked whether the government was preparing to downgrade its forecast for this year, Idrac said the government aimed to be as accurate as possible in its economic forecasts.
"If necessary, we could readjust them in the weeks to come," she said.
(Additional reporting by Tamora Vidaillet; Editing by Ron Askew)
(Reuters Messaging: anna.willard.reuters.com@reuters.net; +33 1 49 49 5339; anna.willard@reuters.net))