* Sees major risk of protectionism, including via FX rates
* Sees good reasons for thinking about exit strategies
* Says German economy could grow 3 pct or more this year
(Adds quote, details)
By Gernot Heller
BERLIN, Oct 20 (Reuters) - German Chancellor Angela Merkel said on Wednesday that the euro remained vulnerable and was being shielded at the moment by the euro zone's safety net.
"The weakness of the euro we experienced in the spring ... has not been overcome yet," Merkel told an event held by the BGA foreign trade association in Berlin. "The euro is protected at the moment by rescue mechanisms."
Fears about the solvency of some euro zone member states prompted the European Union to set up a 750 billion euro rescue fund to support the European single currency earlier this year, working in tandem with the International Monetary Fund (IMF).
That mechanism is due to expire in mid-2013, and Merkel reiterated that it could not "simply be extended."
The chancellor said she saw a major risk of protectionism, including from the influence of foreign exchange rates.
Merkel said she supported a French initiative to put foreign exchange on the agenda of the G20 presidency.
Commenting on measures put in place to help economies cope with the economic downturn, she said: "I think there are good reasons to be thinking about exit strategies now."
Merkel also said the German economy could grow by "3 percent or perhaps even a bit more this year."
A government source told Reuters earlier on Wednesday that the government expects gross domestic product (GDP) to increase by 3.4 percent in 2010, and by 1.8 percent in 2011.
Merkel also said she expected federal net new borrowing to total just above 50 billion euros this year. That is slightly less than previous forecasts. (Writing by Paul Carrel and Erik Kirschbaum; Editing by Ron Askew)