The dollar is on a slide against most of the developed world's principal currencies -- notably the euro, the pound sterling and the Swiss franc -- as well as gold.

In Asian trading on Monday the euro surged to its strongest reading against the greenback -- 1.3367 dollars -- since March 2005. The single European currency has shot up 11 percent against the dollar since the start of the year.

Antoine Brunet, an economist at the HSBC bank here, said the dollar's plunge suggested that "we have once again entered a dangerous turbulent zone on exchange markets".

The weakening trend was in part triggered by comments last month from People's Bank of China governor Zhou Xiaochuan that were seen as heralding a possible shift in some of the bank's massive foreign currency reserve holdings away from the dollar.

Adding to the pressure were indications of an economic slowdown in the United States, holding out prospects for a cut in US interest rates by the Federal Reserve at a time when rates are seen rising in the eurozone and Japan.

Those factors have sparked heavy capital movement that is unfavorable to the dollar, according to analyst Olivier Bizimana at the French bank Credit Agricole.

At the same time, he warned, there is a conviction that "current imbalances cannot continue", a reference to a situation in which countries such as Japan and China that have huge current account surpluses finance big current deficits carried by the United States.

The current account is a broad measure covering a country's trade in goods and services as well as certain financial transfers.

What economists fear in particular is that a deep-seated crisis of confidence in the dollar, as well as the US economy, could lead to a disruptive and dramatic sale of US assets by foreigners.

That could prompt the US Federal Reserve to raise interest rates, thereby threatening economic recoveries in the United States and elsewhere.

An awareness of such dangers is hardly new, with warnings having been repeatedly voiced by the International Monetary Fund and other institutions.

In its latest economic assessment issued last week, the Organisation for Economic Cooperation and Development stressed that US current account imbalance "must revert to a sustainable level at some point".

It added that the "unwinding could be disorderly and could involve a bout of exchange rate volatility and a global surge in interest rates".

But economist Julian Jessop at Capital Economics argued for calm.

"The widespread assumption that a fall in the value of the dollar is a bad thing is debatable," he maintained. "A slump in the dollar is sometimes discussued in the same apocolyptic terms as a slump in the US stock market or bond prices.

"However, there is one obvious difference: a fall in US equities or bonds is likely to cause falls in markets elsewhere. But a fall in the dollar means that by definition other currencies must be going up. The various positives and negatives might therefore offset each other at the global level, although there will be relative winners and losers."

For example, the eurozone could benefit if Asian currencies such as the Chinese yuan strengthened appreciably against the dollar, a trend that could boost the competitiveness of eurozone exports to what is the most economically dynamic region of the globe.