The hit a two year low against the yen and hovered near record lows against the euro on Monday as financial services firms continued to warn about the slowing economy and lower expectations, raising the chance that the Federal Reserve may but interest rates.

Goldman Sachs said Monday that Europe's largest bank, HSBC Holdings Plc, could face up to $12 billion in additional write-downs related to poorly performing subprime loans. Shares of American financial firms, Morgan Stanley, Lehman Brothers Holdings Inc and Merrill Lynch & Co. dropped on continuing concerns over subprime linked securities.

Concerns about inflation in the U.S. economy have also fed into the dollar's decline, as investors anticipate that the Federal Reserve may need to continue to cut interest rates to give a boost to the economy.

In an effort to bring calm to financial markets, the European Central Bank promised Friday that it was ready to inject liquidity into money markets.

The dollar fell to $1.4880 per euros at 4:47 p.m. in New York, just short of the all time low of $1.4966 per euro on Friday. The yen reached a two-year high against the dollar at 107.28 yen from 108.32.

The dollar's weakness has led to falls versus low-yielding currencies including the Swiss franc and yen.

London interbank offered rates (LIBOR) for two-month and three-month euro rates rose to their highest levels in a month.