Ulrich Beckmann, Frankfurt-based international economist at Deutsche Bank, has been the most accurate forecaster on the currency's prospects. He expects the dollar to strengthen to 1.80 deutschemarks over 12 months.

Most panellists had predicted that the mark would fall, but the extent of the decline last month took them by surprise.

International speculator George Soros contributed to the sentiment against the currency when he publicised his pessimistic positions, but panellists say he was knocking on an open door.

The panellists had been bearish for months. The only question on the mark's fall was when.

The average six-month dollar forecast is 109 yen, 1.76 marks and 1.55 Swiss francs.

The pound is expected to fall to $1.46.

The mark strengthened late last week after the Bundesbank cut its key discount rate by half a percentage point to 6.75 per cent.

The interest rate fall was followed by cuts ranging between 0.25 and 0.5 percentage points by several European and Scandinavian nations, including France, Spain, the Netherlands, Denmark, Sweden and Switzerland.

After cutting interest rates in recent months, Britain is waiting to see how its economy performs, but with business bumping along the bottom, it is widely expected that rates will fall in the autumn.

European currency weakness is expected to persist because unemployment is high and rising, and politicians are pressing for interest rate cuts.

Monetary union, the desired aim of the Maastricht Treaty, is becoming a distant goal.

Off the record, French officials have said the country might leave the European exchange-rate mechanism, and these leaks encouraged the Bundesbank to cut interest rates.

The dollar is forecast to strengthen to 112 yen in 12 months, and the high to low 12-month range is predicted at 115 yen to 100 yen to the US dollar.

This illustrates that the market's views are diverse about the currency.

Most members of the panel, however, reckon that the yen is peaking, although it may remain volatile during this week's Group of Seven economic summit.

Brendan Brown, Mitsubishi Finance International senior economist, believes that the yen is overbought.

The chart shows that the mark has plunged by 28 per cent against the yen since its peak of 89 yen in August last year.

The dollar has slumped by 20 per cent from its 12-month peak.

Despite Japan's huge trade surplus and efforts by President Bill Clinton's officials to talk up its currency, Mr Brown says there are several bearish factors weighing on the yen.

Political uncertainty has taken the ''froth'' out of the market.

The most significant bear factor, according to Mr Brown, is China's ''bubble economy''.

Japanese exports to China boomed early this year, but have since slowed down.

China has taken measures to curb its overheated economy.

The market rate of the renminbi has tumbled by 43 per cent against the yen since the beginning of the year.

So the cost of Japanese goods has soared for China's importers.

Since other Asian currencies are linked to the US dollar, prices of imports will also rise.

US and European purchasers are already complaining.

Also mitigating against the yen, says Mr Brown, is the likelihood that Japanese financial institutions will take advantage of cheaper foreign currencies and buy bonds.

Capital outflows are thus likely to increase.

Sterling was firm in recent weeks partly because Japanese institutions bought stocks and bonds.