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Dollar Rebound? Japanese analysts see turn-around

Posted April 16, 2008

Blogger’s Note: It has become fashionable to link the dollar’s decline since 2002 with the Decline and Fall of the Roman Empire, the end of the “American Century,” or at the very least with the end of the world as we know it.

But as China, Japan and Europe are seeing vital profit margins vaporized by the declining dollar and inflation whittle away prosperity and real growth, it would appear that the dynamic market will react to the dollar decline… at least that what this article on Bloomberg.com argues.

Baltimore — (TFN): Japan’s two biggest brokerages said the dollar will rebound against the euro and yen by year-end as economic conditions in Europe and Japan deteriorate and U.S. interest-rate cuts near an end.

The European Central Bank will be forced to lower borrowing costs in the second half as growth in the region slows, according to Daiwa Securities SMBC Co. Yen buying isn’t “sustainable” because the Japanese economy will cool and interest rates abroad are more attractive, said Nomura Securities Co.

“U.S. rates and yields will cease to fall and then the dollar weakness will bottom out,” Takahide Nagasaki, senior currency strategist at the unit of Daiwa Securities Group Inc., Japan’s second-largest securities firm, said at a financial seminar in Tokyo yesterday.

The dollar will gain 8 percent to 110 yen this year and 9 percent to $1.45 per euro, Nagasaki said. Nomura Securities predicts the same levels, making the two firms more bullish on the currency than the median estimates in Bloomberg News surveys of 100 yen and $1.48.

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Posted by J. Christoph Amberger · Filed Under US Stocks and Markets 

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