The slide in the value of the dollar has accelerated, with the US currency plumbing new lows despite central bank intervention.

The euro has traded at more than $0.98 for the first time since February 2000, extending a rally that has seen it gain almost 9% against the US currency this year.

I do have great confidence our economy is going to go forward - we're going to be fine

US Treasury Secretary Paul O'Neill

Earlier in the day, the Bank of Japan intervened in the markets to help prop up the dollar, which has hit a series of lows against all major currencies in recent weeks.

The dollar blipped higher against the yen in Tokyo trading, but started to fall again after European markets opened.

The tumbling dollar has already stirred fears in export-dependent Japan, and is likely to raise the economic stakes ahead of the G8 meeting of rich countries in Canada this week.

Calls for action

The dollar is reckoned likely to ease further.

The US Federal Reserve is set to decide on interest rates on Wednesday, and is expected to leave them unchanged.

The dollar can expect no help from Alan Greenspan

Persistently weak US stock markets show no sign of a durable recovery, prompting investors to switch yet more cash into European and Asian markets.

"Rising public deficits, a ballooning current account deficit, lagging investment and a consumer sector suddenly looking shaky indicates that foreign accounts might not only be unwilling to allocate additional funds to the US, but might also consider liquidating assets," said Hans Redeker, global head of foreign exchange strategy at BNP Paribas.

In the meantime, there is growing pressure on world leaders for concerted efforts to prop up the dollar.

The G8 summit could in theory be a venue for such joint intervention, as it has in the past.

Weak will

But the political will for concerted intervention may not be universal: the US is not absolutely in favour of a strong dollar, and Europe has enjoyed the recent unaccustomed strength of the euro.

European Commission economic and monetary affairs spokesman Gerassimos Thomas said the euro's rise had been widely expected.

"This year and last year we insisted that the euro was undervalued and that the rate of exchange was not in line with economic developments in the eurozone."

Speaking on US television on Sunday, Treasury Secretary Paul O'Neill said he was unconcerned.

"The market decides what the right number is... I do have great confidence our economy is going to go forward.

"We're going to be fine."