Analysts said weak US data on Friday had helped to cement expectations of further interest rate cuts from the Federal Reserve.
The dollar fell to a low of SFr1.1151 against the Swiss franc, its weakest level since 1995, before pulling back to stand at SFr1.1180, down 0.1 per cent on the session.
The Swiss franc also rose 0.1 per cent to SFr1.6370 against the euro. Meanwhile, the dollar dropped 0.4 per cent to Y110.40 against the yen.
Analysts said the low-yielding yen and Swiss franc were both benefiting as rising risk aversion saw investors trim back carry trades, in which low-yielding currencies are sold to finance the purchase of riskier, higher-yielding assets elsewhere.
Indeed the yen rose 0.6 per cent to Y161.46 against the euro, climbed 0.9 per cent to Y98.10 against the Australian dollar and rose 0.7 per cent to Y226.15 against sterling.
Elsewhere, the pound fell 0.3 per cent to $2.0460 against the dollar and dropped 0.1 per cent to £0.7150 against the euro after a weak UK house price survey reinforced expectations for a near-term cut in Uk interest rates.Meanwhile, the dollar edged 0.2 per cent to $1.4630 against the euro.
However, analysts said news that ministers from Opec would meet next month to discuss the impact of a falling dollar and the merits of revaluing their currencies had ensured the dollar begun the week on a weak footing.
Friction among oil-producing Gulf states, which peg their currencies to the dollar, were heightened last weak as the United Arab Emirates said it had come to a crossroads” over dollar weakness and was considering ditching the dirham’s dollar peg in favour of a basket of currencies.
Expectations of a shift in Gulf states currency regimes were heightened on Monday as reports suggested that Saudi Arabia, which so far has rejected any change in the riyal’s dollar peg, might allow a one-off appreciation in its currency, but keep its peg to the dollar.
The speculation sent the Saudi riyal up to a high of SR3.7075 against the dollar, its highest level since Saudi currency was pegged to the dollar at SR3.75 in 1986.