The International Monetary Fund has downplayed the impact of global currency war among countries, but admitted it is possible.

IMF chief Dominique Strauss-Kahn said the risk of a worldwide war on currencies should not be feared but it has been part of a so-called downside risk for economies dependent on exports.

He told reporters in Washington on Tuesday: "I think the probability is rather low, because everybody can understand that too big conflicts... will have a negative impact. Nevertheless it may happen."

Since the financial meltdown occurred two years ago, an evident coping mechanism for some economies was to pour in currency markets to make exports cheaper, but the downside would be its long-standing impact to exporting and importing partner-countries.

Countries like Brazil have recently felt the heat of on its currency and no less than Finance Minister Guido Mantega has hinted that a policy intervention may soon be considered to protect the competitiveness of the country's exports.

Mantega is concerned about the upswing of the Brazilian real, which in the last four months had risen by 6.1 percent to 1.7119 per dollar. It has gained 35 percent since the end of 2008.

The Brazilian government has been buying dollars piling up its international reserves to a record $274 billion since it made every day purchases since July 9 to ease the flow of the foreign currency into its financial system.

Strauss-Khan noted that this would be one of the fundamental issues to be discussed during the IMF annual meetings and forthcoming G-20 summits in Korea in October and in November.