Wells Fargo projects modest dollar strength

CEBU, Philippines -  Wells Fargo Securities Economics Group is projecting that the greenback is going to strengthen modestly against most major currencies over the next few quarters.

“We project that the dollar will strengthen modestly against most major currencies over the next few quarters. Assuming that the global expansion remains intact, the greenback likely will trend lower versus the currencies of most developing countries,” said Jay. H. Bryson, managing director and chief economist of the Group.

He said the dollar rate against Euro is projected at 1.35 in the fourth quarter (Q4) this year; 1.31, 1.29, 1.27 and 1.25 during the Q1, Q2, Q3 and Q4 of 2012 respectively; and 1.25 in the Q1 of 2013.

The China Yuan currency versus the US dollar is forecasted at 6.35 for Q4 this year and at 6.32, 6.27, 6.22, 6.17 for the Q1, Q2, Q3 and Q4 of 2012 respectively, and 6.12 for the Q1 of 2013.

However, the dollar will weaken versus many "commodity" and "emerging" currencies, Bryson said.

Meanwhile, Wells Fargo reported that global expansion will continue but global Gross Domestic Product (GDP) growth will be sub-par by 2012.

During a recent economic briefing, organized by Security Bank, Bryson reported that the global GDP growth measured using the purchasing-power parity weights (PPP weights) will improve to 3.4% in 2011, 3.1 percent in 2012 and 3.7 percent in 2013. The global GDP expansion measured using the Market

Exchange Rates is forecasted at 2.2 percent in 2011, 1.9 percent in 2012 and 2.5 percent in 2013.

The advanced economies GDP growth (based on aggregated PPPs) will record improvement of 1.4 percent in 2011, 1.3 percent in 2012 and two percent in 2013. These economies include the United States, Euro-zone, United Kingdom, Japan, Korea and Canada.

The US GDP based on PPPs will grow by 1.6 percent in 2011, 1.5 percent in 2012 and 1.7 percent in 2013. The Eurozone GDP will improve by 1.5 percent in 2011, 0.1 percent in 2012 and two percent in 2013. —