Nov. 6 (Bloomberg) -- The falling dollar is part of a ``global rebalancing process'' and isn't cause for alarm, according to David Rosenberg, chief North American economist at Merrill Lynch & Co.

The dollar, which has dropped 30 percent against the euro in the past five years, reflects a correction of the U.S. currency's overvaluation from 1997 to 2002, Rosenberg said in a research note dated Nov. 2. The dollar, measured by the Federal Reserve's trade-weighted index, is little changed compared with its value a decade ago, he said.

``The dollar is no lower today than it was in 1997 -- we don't remember that being a particular Armageddon-type time period,'' Rosenberg said. ``Far from being a disturbing development, the dollar's decline is part and parcel of the global rebalancing process.''

The dollar fell 0.6 percent to $1.4561 per euro at 9:27 a.m. in New York and earlier touched $1.4570, the weakest since the European currency's debut in January 1999. The dollar dropped to $1.0827 per Canadian dollar, the lowest since Canada first allowed its currency to float in 1950. The U.S. currency also reached $2.0907 per pound, the cheapest since 1981.

The Fed's broad trade-weighted dollar index fell to 98.24 yesterday, the lowest since November 1996.

The index reached 130.07 in February 2002, its highest since January 1995, when Bloomberg began collecting the data. The dollar benefited from a slump in Asian currencies after the 1997 financial crisis, a sell-off in commodities-linked currencies, euro weakness and a Japanese recession, Rosenberg said.

The dollar index showed an ``unwinding in an orderly fashion'' of the ``overvaluation'' of the past decade, Rosenberg said.

To contact the reporter on this story: Min Zeng in New York at mzeng2@bloomberg.net.

Last Updated: November 6, 2007 09:45 EST