The US dollar remains overvalued despite losing ground against other currencies during 2007, the International Monetary Fund said Wednesday.

With its hint that the dollar may be headed for further decline, the IMF cited the wide US trade deficit, a slow-growing economy and the Federal Reserve's cut in interest rates last month.

The euro, which currently buys about 7 per cent more US dollars than on January 1, is trading at levels broadly consistent with Europe's economic situation, the IMF said in its latest global economic outlook.

"The dollar remains overvalued relative to medium-term fundamentals," the report said.

Meanwhile, the Japanese yen is undervalued despite some appreciation since June, the report said. dpa tc cc