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FOREX FLASH

<strong>JPMorgan sees further falls for buck</strong><br /><br />JPMorgan yesterday cut its 2010 forecast for the US dollar and predicted that the greenback will fall to as low as $1.62 per euro in the second quarter of next year. The continuing decline in the dollar will be driven by signs that the Federal Reserve will keep its rates on hold until 2011 and investors sell dollars to fund purchases of higher-yielding assets. Analysts at the bank had previously expected the dollar to bottom out at $1.50 against the single currency in the first quarter. <br /><br /><strong>Mexican peso to rise 20 per cent</strong><br /><br />Mexico&rsquo;s peso is predicted to rise 20 per cent against the dollar over the next 12 months according to Pacific Investment Management Co (Pimco), which manages the world&rsquo;s biggest bond fund. Pimco said that because the currency is one of the cheapest in emerging markets and exports to the US are set to grow, the peso would continue to rise. This was in spite of ratings agency Fitch cutting the country&rsquo;s sovereign debt rating a notch to BBB.<br /><br /><strong>China reiterates yuan policy</strong><br /><br />China&rsquo;s vice foreign minister Zhang Zhijun yesterday repeated China&rsquo;s commitment to keeping the yuan&rsquo;s exchange rate stable at a reasonable and balanced level. The country has been under pressure to revalue its currency and allow it to appreciate against the US dollar. However, this policy statement was not mentioned in the Chinese central bank&rsquo;s latest monetary policy report. <br /><br /><strong>South Africa&rsquo;s growth fuels rand</strong><br /><br />South Africa&rsquo;s rand made a second consecutive day of gains against the US dollar following a government report that showed the economy had returned to growth in the third quarter of the year. The growth figure for Africa&rsquo;s biggest economy came in stronger than analysts had expected, which added to the currency&rsquo;s upward momentum.<br /><br /><strong>Russia cuts cost of borrowing</strong><br /><br />Russia&rsquo;s central bank, Bank Rossii, yesterday cut interest rates to a historically low 9 per cent. Bank Rossii said that the cut would help to both stimulate bank lending and would also reduce the speculative flow of hot money into the economy which has boosted the rouble.