Dollar Will Fall in Summer but Return To Current Level Later in '86, Many Say
The U.S. dollar will fall further this summer but then recover by the end of the year to about its current levels, many economists and foreign-exchange traders say. But a few analysts don't expect the currency to rebound at all this year.</br></br>The more upbeat scenario assumes that a sluggish U.S. economy, lower interest rates and a continuing wide trade deficit will drag down the dollar in the third quarter. Then, in response to the weakened dollar and lower interest rates, the economy and trade balance would improve in the fourth quarter, lifting the U.S. currency.</br></br>"All that's left to do between now and the end of the year is to ride a roller coaster," says Robert A. Brusca, senior vice president and chief economist at Nikko Securities Co. International, New York.</br></br>Under the more bearish view, by contrast, a fourth-quarter economic recovery won't materialize. "I don't see any bottom in sight" for the dollar, says Steve H. Hanke, chief economist for Friedberg Commodity Management Inc., a Toronto currency and commodity trader.</br></br>Regardless of their outlook for the fourth quarter, many market participants agree that the dollar will fall about a further 9% by summer's end, to between 140 and 150 Japanese yen, 2.00 and 2.10 West German marks and about 1.70 Swiss francs.