China and other developing countries should act to reduce their current account surpluses, US Federal Reserve chairman Ben Bernanke is to say in a firm rebuff to complaints that the Fed is manipulating the dollar.

“The current international monetary system is not working as well as it should,” Mr Bernanke will say, according to the text of a speech to be delivered at a European Central Bank conference on Friday morning. “Currency undervaluation by surplus countries is inhibiting needed international adjustment and creating spillover effects that would not exist if exchange rates better reflected market fundamentals.”

Mr Bernanke’s speech is a robust defence of the Fed’s new $600bn round of asset purchases in the face of international criticism. He argues that the Fed’s policy will help to rebalance global demand, boost the world economy by strengthening US growth, and reduce the risk that the US sees “millions of workers unemployed or underemployed for many years”.