Billionaire investor and philanthropist George Soros said on Thursday that the world's current currency arrangements are fraught with danger and that the world needs global regulation.

Soros, who runs hedge fund firm Soros Fund Management and has made his reputation with bold currency bets, said the U.S. dollar ought to be falling in value against the Chinese currency to allow the United States to contain its current account deficit.

However, Soros said because the renminbi is tied to the greenback, the Chinese currency is constantly undervalued leaving the dollar to sink against the world's other major currencies.

The dollar has lost about 7 percent this year against a basket of the world's major currencies.

Meanwhile, an undervalued yuan makes Chinese consumer goods cheaper in foreign markets. Beijing has powered the country's growth by targeting U.S. and other consumer markets with its exports, putting many producers in those markets out of business because they cannot compete.

Soros, who earned $1 billion in 1992 by betting against the British pound, said current currency arrangements are fraught with danger.

He said that the globalization of financial markets was built on a false pretense that financial markets could be left to their own devices and said global regulation was needed.

That is a tremendous challenge, he said at an event sponsored by the Economist magazine held at the New York Stock Exchange.

Soros spoke only hours after the U.S. Treasury Department said that China is not manipulating its currency but is piling up foreign exchange reserves at a rate that threatens progress in reducing global economic imbalances.

Turning to the world economy, Soros said the world economy is going to have some growth, but we are bound to be flat.

He also said the U.S. is going to be a drag on world growth.

In China, Soros said he also believes there is a something of an asset bubble.

(Reporting by Phil Wahba and Svea Herbst in New York and Glenn Somerville in Washington; Editing by Carol Bishopric, Bernard Orr)