The dollar tumbled to new three-year lows against the euro and slid on the yen as the market tightened its focus on the prospects of war with Iraq.
Last night US Secretary of State Mr Colin Powell said there were "problems" with Iraq's 12,000-page weapons declaration to the United Nations. He expected the United States to release a final assessment of the declaration late this week.
This raised worries Washington is intent on attacking Iraq soon and weighed on the dollar as investors fret about the huge financial costs of a war that the country might become more vulnerable to external attacks such as those on September 11th.
By 9.35 a.m., the euro had posted fresh three-year highs above $1.03 and was trading up over three-quarters of a per cent on the day.
The dollar lost half a per cent against the yen to 120.70, within striking distance of last week's one-month low of 120.29.
The safe-haven Swiss franc hit a new four-year high against the dollar of 1.4298 as gold and oil prices soared.