Forecasting the value of currencies has always been more art than science. Nevertheless, JP Morgan, an American investment bank, has undertaken the most ambitious project of developing a set of 3-month and 12-month forecasts for many of the world’s currencies. Overall, JP Morgan is predicting a modest decline in the Dollar over the next 3 months against most of the world’s majors, perhaps due to declining economic prospects. Over the following 9 months, however, the USD is forecasted to gain ground, finishing the year above where it started. The forecasts are relatively conservative, with the exception of the Chinese Yuan, which is predicted to rise almost 20% against the USD in the next 12 months. Considering the Yuan rose by less than 4% in 2006, this is a lofty prediction indeed!

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