May 26 (Bloomberg) -- The dollar may fall against the euro, extending a seven-week slide that pushed it close to the lowest since the currency was introduced in January 1999, on prospects the U.S. will allow the dollar to weaken to help economic growth.

Twenty-one of 30 traders, analysts and investors surveyed on Friday recommended buying Europe's common currency versus the dollar. The U.S. currency last week accelerated declines that have pushed it down more than 10 percent against the euro since April 4 after Treasury Secretary John Snow suggested U.S. officials are content to see the currency weaken to spur exports.

``These are powerful and pervasive trends that we're seeing,'' toward a weaker dollar, Jonathan Prince, a foreign- exchange manger with National Australia Bank Ltd. in Sydney, told Bloomberg Television. ``There's some official endorsement of this move in the U.S. dollar.''

The dollar was at $1.1818 to the euro at 8:30 a.m. in Tokyo, from late Friday in New York when it weakened to $1.1838, compared with its low of $1.1899 per euro on Jan. 4, 1999, as the European currency made its debut. The U.S. currency was at 116.93 yen, from 116.91. Trading may be less than usual because London and New York markets are closed for a public holiday, analysts said.

UBS Warburg LLC, the biggest trader in the $1.2 trillion-a- day currency market and a survey participant, last week lowered its dollar forecast, calling for the currency to slide to $1.25 per euro by the end of the year, rather than $1.20.

A weaker dollar against the euro can benefit the U.S. economy and narrow its current-account deficit by making U.S. products cheaper to buy overseas. It may also make imports to the world's largest economy more expensive, introducing some inflation at a time when the Federal Reserve has said it is worried about lower prices, undermining an economic recovery.

Demand for the dollar has been damped as investors put money into countries with higher interest rates, such as the 12-country euro region, depriving the U.S. of funds to reduce its current account deficit, the broadest measure of trade and investment.

Investors expect the Fed to keep its benchmark interest rate at a 41-year low to boost the economy, which expanded at a 1.6 percent rate in the first quarter, and help stem a slowdown in inflation. Fed Chairman Alan Greenspan last week reiterated central bank concerns about an ``unwelcome substantial fall in inflation'' hurting the economy's growth prospects.

``The U.S. is ready to allow further weakness in the dollar to ease the deflation risk,'' said Lionel Kwok, chief investment officer at BOCI-Prudential Asset Management in Hong Kong. Kwok, a survey participant, recommended investors sell the dollar against the euro, Swiss franc, Japanese yen, British pound, and Australian dollar.

Still, a rising euro may force the European Central Bank to cut interest rates to support the economy of its 12 member nations and help exporters that may be losing orders. The euro has risen 28.4 percent against the dollar in the last 12 months.

Last Updated: May 25, 2003 19:51 EDT