Dollar to extend drop against euro

THE dollar will extend its 14% drop against the euro in the past 12 months and decline against the yen after the Group of Seven finance ministers called for flexible exchange rates, according to Merrill Lynch & Co.

“The G-7 meeting is the start of a broadening of dollar weakness,” Yianos Kontopoulos, Merrill’s chief currency analyst, wrote in a note to investors. The bank recommends buying euro, yen and the Canadian dollar against the US currency.

Departing from the language of the past three years, finance ministers of the G-7 countries on Saturday said in a statement that “more flexibility in exchange rates is desirable”.