Tags: dollar | decline

Forecasters See Dollar Decline Next Year

By Dan Weil   |   Monday, 23 Nov 2009 04:28 PM

The top performing forecasters in Bloomberg’s survey of 46 firms predict the dollar will continue falling next year.

The sluggish economic recovery and exploding government debt burden will weigh on the currency, they say.

Already the dollar has hit 14-month lows this year.

Standard Chartered bank, which placed first in estimating the dollar-euro rate over the 18 months ended June 30, sees the euro rising 5.5 percent against the dollar next year, to $1.58.

“History tells us the dollar shouldn’t start rising on a sustained basis until 12 months after the Fed starts to lift rates,” Callum Henderson, the bank’s head of foreign exchange strategy told Bloomberg.

“It’ll take time to drain the oversupply of dollars from the market. The dollar will remain weak until the Fed’s rates rise above the competitors.”

All three of the top performers in Bloomberg’s survey see the dollar falling against the euro next year.

That includes Aletti Gestielle (an Italian money management firm) and HSBC in addition to Standard Chartered.

The dollar bears are contrarians, as 24 of the 37 predictions on dollar-euro have the greenback rising next year.

But some of the most renowned currency experts anticipate the dollar will depreciate further.

"I think the dollar is an over-owned currency,” Pimco managing director Bill Gross told CNBC.

“The Chinese, the Asians have basically owned too many dollars for too long."

In addition, the U.S. government favors a dollar decline to boost exports, he said.

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The top performing forecasters in Bloomberg’s survey of 46 firms predict the dollar will continue falling next year.The sluggish economic recovery and exploding government debt burden will weigh on the currency, they say. Already the dollar has hit 14-month lows this...
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2009-28-23
 

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