Credit Suisse First Boston (CSFB) says the dollar will continue to strengthen against the euro and yen next year.

This morning the dollar stood at 1.7720 to the pound and at 1.2020 against the euro.

Switzerland's second largest bank believes the dollar will rise to $1.08 against the euro and hit 130 yen by the end of 2006, as higher yields in the US market attract investors.

A recent report by the CSFB carried by Bloomberg said that "the dollar remains attractively valued against most major currencies".

The dollar has gained considerably this year due to eight interest rate increases that have pushed it up to 4.25 per cent, the highest the rate for four years.

The European Central Bank's rate is currently 2.25 per cent while in Japan rates have been near zero per cent since 2001.

However, a recent statement by the Federal Reserve, hinting at a possible interest rate slowdown, hit the dollar hard earlier this week, with many experts believing rates have reached a peak for the short-term.