U.S. BANKER PREDICTS FURTHER DOLLAR FALL THIS YEAR A leading U.S. Banker said the dollar was likely to fall another five to 10 pct this year and an improvement in the huge American trade deficit would be only temporary at current world exchange rate levels. Kurt Viermetz, Worldwide Treasurer of <Morgan Guaranty Trust Co>, told Arab currency traders meeting here that the steady depreciation of the dollar had not gone far enough to rein in U.S. Deficits on a lasting basis. Speaking at the 14th annual congress of the Interarab Cambist Association, Viermetz said an agreement reached last month among major industrial nations to steady the dollar around current levels left many questions unanswered. "I cannot see any chance for a real turnaround (rise) in the dollar," Viermetz said. "I believe there is room for a further fall of five to 10 per cent in 1987." The United States, West Germany, Japan, France, Great Britain and Canada -- G-6 -- agreed in Paris in late February to stabilise major currencies around current levels. The accord came after months of transatlantic argument, with Tokyo and Bonn claiming Washington's policy of talking the dollar lower had made life impossible for West German and Japanese exporters. The Paris accord also brought a pause to the continued slide of the dollar engineered by a meeting in New York in September 1985 when industrial nations agreed to depress the value of the currency to help redress global trade imbalances. But Viermetz said Morgan Guaranty's economic models showed that with no further change in exchange rates -- and continued sluggish growth in West Germany and Japan -- the U.S. Trade deficit would improve only temporarily. He said the deficit might fall to 145 billion dlrs this year from 165 billion in 1986 and further improve to 120 billion in 1988 but by 1990, it would be back around 160 billion dlrs. "This is clearly unacceptable for the monetary authorities and politicians in Washington," he said. Viermetz said it was only natural that markets should attempt to test the credibility of the Paris accord, struck when the dollar was trading at about 1.83 marks and 152.50 yen. Immediately before the historic 1985 New York agreement or "Plaza Accord," the dollar had been trading at 2.84 marks and 240 yen. Viermetz said he believed major nations in Paris wanted to see the dollar hold within a "loose range" of 1.75 to 1.90 marks and 145 to 155 yen, with any attempt to push the U.S. Currency lower being countered by central bank intervention. The dollar ended in New York yesterday at 147.15/25 yen -- its lowest level against the Japanese currency in roughly 40 years. It closed at 1.8160/70 marks. Viermetz also said he did not see the U.S. Federal funds rate falling below six pct for fear of provoking an uncontrolled fall in the dollar. But at the same time, worries about the international debt crisis would mean there was little chance of a rise above 6-3/4 pct since this would increase loan costs to the third world. The Middle East foreign exchange conference brings together more than 200 traders and bank treasury chiefs from the Arab world and Arab banks in European and U.S. Financial centres. Formal discussions, which end today, have also centred on the role of Arab banks in world financial markets, with bankers urging them to adapt to a new global trend towards securitisation of business. Hikmat Nashashibi, President of the Arab Bankers Association, said Arab banks have to shake off their old mentality of commercial banking and concentrate more on investment banking.