* Rebalancing global economy doesn't mean euro strength
* Other currencies, especially emerging market, should rise
* Trusts U.S. assurances on strong dollar policy
(Adds comment on U.S. dollar policy, exit strategies)
By Brian Love and Nick Edwards
ISTANBUL, Oct 5 (Reuters) - The need to rebalance the global economy does not at all mean the dollar should depreciate against the euro, European Central Bank President Jean-Claude Trichet said on Monday.
Asked whether rebalancing the global economy implied a
weaker dollar and a stronger euro
Trichet was speaking on the sidelines of International Monetary Fund meetings in Istanbul, where the need to reduce trade imbalances in the world economy to reduce the risk of another recession has been a major topic of discussion.
Many economists think the United States' huge trade and budget deficits mean the dollar may have to fall. But Trichet took pains to stress that the euro should not have to bear part of that adjustment.
"It is absolutely clear that a number of currencies have to progressively and orderly appreciate vis a vis both the dollar and the euro, but certainly not at all any change in the bilateral relationship," Trichet said.
"If there is any qualification, it would certainly be that the other currencies, in particular currencies of the emerging world, should appreciate, or would appreciate, taking into account this strategy in the medium and longer term."
EXPORTS
Trichet and some other European officials, particularly the French, have expressed concern in the last few weeks that excessive strength of the euro could hurt the region's exports.
The euro has risen about 14 percent against the dollar since March and, at around $1.46, is not far from its record high of $1.6038, hit in July 2008.
Finance officials and central bank governors of the Group of Seven rich nations, meeting in Istanbul on Saturday, issued a vague statement that condemned excessive currency volatility in principle but did not send any strong signal to markets that the G7 wanted to prevent further dollar weakness.
Asked what action might be taken to stop the dollar falling, Trichet said the G7 statement spoke for itself, adding that he put faith in assurances by U.S. policymakers that they wanted a strong dollar.
"I trust the U.S. authorities when they say that a strong dollar is in the interests of the U.S," Trichet said.
"It was said by (U.S. Treasury Secretary) Tim Geithner, by (U.S. Federal Reserve Chairman) Ben Bernanke...so this is important and I trust it is very important that they say that."
EXIT STRATEGY
Asked if the ECB was prepared to raise interest rates in the euro zone before unemployment peaked, as part of its strategy to unwind monetary policy measures taken during the financial crisis, Trichet replied that current rates were appropriate.
"We will do what is necessary and there is no doubt, very fortunately, in the observers' constituency -- market participants and so forth -- because they trust us to do whatever would be necessary.
"Confidence is of the essence. If I draw any conclusion from all the discussions we had here (in Istanbul), it's that concentrating on improving confidence would be exactly appropriate." (Reporting by Brian Love and Nick Edwards; Editing by Andrew Torchia)