Nov. 17 (Bloomberg) -- The dollar fell to a record against the euro for the fourth time in two weeks and dropped versus the yen as U.S. Treasury Secretary John Snow signaled he won't back any agreement to stem the currency's slide.

``The history of efforts to impose non-market valuations on currencies is at best unrewarding and checkered,'' Snow said in response to a question on whether he would support an agreement with Europeans to manage the pace of the dollar's decline. He made the comments after a speech at London's Chatham House.

Against the euro, the dollar fell to $1.3031 at 8:32 a.m. in New York, from $1.2956 late yesterday, according to electronic foreign-exchange dealing system EBS. It dropped as low as $1.3048, the weakest since the euro's 1999 debut. The U.S. currency also fell to 104.30 yen, from 105.35, trading at its weakest since April 5.

``It's become obvious the U.S. administration isn't going to stand in the way of dollar weakness,'' said Jeremy Fand, a senior proprietary trader in New York at WestLB AG. ``The U.S. administration is playing hardball with the Europeans. If the Europeans aren't going to stimulate their economy they have to understand there's a consequence.''

Fand predicted the dollar will fall to $1.35 per euro in the next few months. He said the European Central Bank wouldn't ``hit the panic button'' and consider selling the euro to weaken it until it reaches about $1.40.

The Dollar Index, which measures the dollar against a basket of six currencies, fell to 83.36, the lowest since 1995, according to data compiled by Bloomberg. The New York Board of Trade's index averages exchange rates between the dollar and six other currencies, with the euro accounting for 58 percent.

Euro a `Worry'

The U.S. currency remained lower after the government said consumer prices rose 0.6 percent in October, the biggest gain since May. The core index, which excludes food and energy, gained 0.2 percent last month.

The euro's advance is ``a worry,'' Belgian Finance Minister Didier Reynders said two days ago in Brussels after meeting with his European counterparts. At least six European Central Bank officials, including President Jean-Claude Trichet, said in the past 10 days that recent currency moves were unwelcome. Snow said today that markets should set the euro's value.

``The bottom line is that Snow has put no barrier to dollar weakness -- the green light is still there to sell the dollar, said Mitul Kotecha, head of currency strategy in London at Calyon, the investment-banking unit of Credit Agricole SA.

The dollar's drop against the yen accelerated when it reached 105, a level at which some traders had placed pre-set orders to sell the U.S. currency, according to Neil Jones, head of currency sales at BNP Paribas SA in London.

Paying Attention

Further so-called stop-loss levels lie at 104.30, Jones said. Traders sometimes place such orders to limit losses in case their bets go the wrong way.

Japanese Finance Minister Sadakazu Tanigaki told reporters today in Tokyo that ``we must pay close attention'' to the yen's exchange rate. He declined to comment on the level of the yen. Japan hasn't sold its currency to stem gains since March, according to finance ministry figures.

Japan, which sold a record 32.9 trillion yen in the fiscal year to March 31, will probably let the currency appreciate further, said Jim O'Neill, head of global economic research at Goldman Sachs Group Inc. in London.

The country's policy makers ``should be pretty relaxed right now,'' O'Neill said. ``If we were to find ourselves close to 100 yen in the next couple of weeks that would be a different story; there might be a fight there.''

Goldman Forecast

The Korean won's rally to a seven-year high against the dollar is also easing pressure on Japanese authorities to stem their own currency's advance, O'Neill said. The won is up 6.2 percent against the U.S. currency in the past month, and the yen has gained 4.8 percent in the same period.

Goldman, which last week lowered its forecasts for the U.S. currency, said its trading ``action this day'' is to sell the dollar against the yen. In a report to clients, the bank advised closing the trade should the dollar close above 107.50 yen.

Measured by the Federal Reserve's Trade-Weighted Major Currency Dollar Index, the dollar has shed 22 percent since Bush took office in January 2001. Under Bill Clinton's last two Treasury secretaries, Robert Rubin and Lawrence Summers, the index advanced about 24 percent.

Further gains in the euro raise the risk of an ``overshoot,'' said European Central Bank council member John Hurley in an interview in Dublin. There is ``nothing ruled in or ruled out'' regarding currency sales by the ECB to stem the euro's advance, Hurley said.

Exports

A rising currency may damp economic growth by making exports more expensive. Exports account for a fifth of the euro region's economy, which grew at quarterly rate of 0.3 percent, the slowest pace in more than a year, in the third quarter.

Greek Finance Minister George Alogoskoufis said Europe alone can't halt the euro's rally, and the U.S. and Japan would also have to buy dollars. ``It's a matter of having a coordinated policy at the global level,'' he said in an interview in Brussels.

The dollar has slumped against the yen and the euro in part on concern about the U.S. current-account deficit, said Michael Klawitter, a currency strategist at WestLB AG in Dusseldorf, Germany. The current account, the widest measure of trade as it includes some investment flows, was a record $166.2 billion in the second quarter. A wider gap means more dollars need to be converted to other currencies to pay for imports.

`Who's Left?'

The U.S. currency's decline may stall, based on a technical indicator some traders use to gauge trends. The dollar's 14-day relative strength index against the euro is at 72.8. Against the yen, it's at 29.9. The index shows how rapidly prices have risen or fallen in a given period. A level above 70 or below 30 suggests a currency may change direction.

Hedge funds and other large speculators placed record bets on the euro to gain against the dollar in the week to Nov. 9, according to U.S. Commodity Futures Trading Commission figures released two days ago.

``When you look at the positioning, you have to wonder who's left to buy the euro,'' said Robert Rennie, currency strategist in Sydney at Westpac Banking Corp. ``The market is significantly short the dollar. That leaves open the possibility of a short- term correction.''

To contact the reporters on this story: Joshua Krongold in New York at jkrongold2@bloomberg.net; Mark Tannenbaum in New York at mtannen@bloomberg.net.

Last Updated: November 17, 2004 08:43 EST