The dollar will weaken to 50 yen from its current level around 90 yen and, eventually, cease to be the world's reserve currency, says Daisuke Uno, chief strategist at Sumitomo Mitsui Banking Corp.
Plus, he predicts, the U.S. economy will experience a double-dip recovery, which will keep the currency weak.
“The U.S. economy will deteriorate into 2011 as the effects of excess consumption and the financial bubble linger,” Uno told Bloomberg.
“The dollar’s fall won’t stop until there’s a change to the global currency system.”
Low U.S. interest rates and record government spending are pounding the greenback.
The dollar has fallen to its lowest levels in over a year against a basket of currencies of the U.S.'s six major trading partners and is also approaching a 14-year low against the yen, according to Bloomberg data.
Brazil, Russia, India and China have all said the world needs a new reserve currency.
The euro, meanwhile, recently hit a 14-month high against the dollar as minutes from Federal Reserve meetings suggested low borrowing costs will stick around until the country is on more solid footing.
“The U.S. dollar remains flat on its back and has all the hallmarks of a patient ready for open heart surgery,” MF Global Analyst Manus Cranny told AFP newswires.
“No strong dollar rhetoric coming from the Fed minutes. . . makes clear that rates are not rising any time soon in the United States.”
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