Robert Mundell, Nobel laureate for economics and commonly known as the father of the euro, suggested yesterday that monetary authorities establish a level of 85 US cents as a floor under which the single European currency could not descend.

"The best way to intervene [in favor of the euro] is to put a floor under it," said Mr Mundell, who was participating in a symposium on the sidelines of annual meetings of the International Monetary Fund and the World Bank in Prague.

Mr Mundell, a US academic credited as the pioneering advocate of a single European currency, also proposed a ceiling of $1.15 for the euro.

The currency was introduced in January 1999 at around $1.16. The euro's trading range could subsequently be tightened to $0.90-$1.10, Mr Mundell suggested.

Meanwhile, the balance of payments on current account in the euro zone recorded a deficit of €2.2 billion ($1.98 billion) in July compared with a surplus of €6.4 billion in the same period last year, the ECB said yesterday.

This was because of a reduction in the surplus of visible trade to €8.4 billion from €14.6 billion, and higher deficits for both income and current transfers, a bank statement said.

Over the first seven months of the year, the balance of current account was showing a deficit of €14. billion compared to a surplus of €21.4 billion in the same period 12 months earlier.