Nomura Holdings Inc. revised its forecasts for the euro and yen against the dollar, estimating that the two currencies will weaken further by the end of 2012.
The firm revised its euro-dollar year-end forecast to $1.23 from $1.25 and increased its estimate for the end of the second quarter to $1.28, from $1.20, Jens Nordvig, a managing director of currency research in New York at Nomura, wrote in a note to clients. Nomura is keeping its 80 yen-per-dollar forecast for midyear and said the Japanese currency may gradually weaken to 85 in the second half of 2012.
Nomura sees “increased potential for near-zero overnight rates for a multi-year period and liquidity effects creating potential for the euro to become a key global funding currency,” Nordvig wrote. “We have analyzed the yen flow picture in detail and concluded that gradual weakness is more likely than a pronounced extension of recent moves.”
The 17-nation euro has strengthened 2.5 percent to $1.3284 this year, and fell to as low as $1.2624 in January. The yen has weakened 6.4 percent to 82.16 per dollar, depreciating to 84.18 earlier this month.
The euro has weakened 0.4 percent since Feb. 29, when the European Central Bank awarded the region’s banks 529.5 billion euros ($703 billion) in a second round of three-year loans. The loans, along with a 1 percent benchmark interest rate, represent the central bank’s efforts to shore up the euro region’s economy amid its sovereign-debt crisis.
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