U.S. BANKER PREDICTS FURTHER DOLLAR FALL THIS YEARA leading U.S. Banker said the dollarwas likely to fall another five to 10 pct this year and animprovement in the huge American trade deficit would be onlytemporary at current world exchange rate levels.Kurt Viermetz, Worldwide Treasurer of <Morgan GuarantyTrust Co>, told Arab currency traders meeting here that thesteady depreciation of the dollar had not gone far enough torein in U.S. Deficits on a lasting basis.Speaking at the 14th annual congress of the InterarabCambist Association, Viermetz said an agreement reached lastmonth among major industrial nations to steady the dollararound current levels left many questions unanswered."I cannot see any chance for a real turnaround (rise) in thedollar," Viermetz said. "I believe there is room for a furtherfall of five to 10 per cent in 1987."The United States, West Germany, Japan, France, GreatBritain and Canada -- G-6 -- agreed in Paris in late Februaryto stabilise major currencies around current levels.The accord came after months of transatlantic argument,with Tokyo and Bonn claiming Washington's policy of talking thedollar lower had made life impossible for West German andJapanese exporters.The Paris accord also brought a pause to the continuedslide of the dollar engineered by a meeting in New York inSeptember 1985 when industrial nations agreed to depress thevalue of the currency to help redress global trade imbalances.But Viermetz said Morgan Guaranty's economic models showedthat with no further change in exchange rates -- and continuedsluggish growth in West Germany and Japan -- the U.S. Tradedeficit would improve only temporarily.He said the deficit might fall to 145 billion dlrs thisyear from 165 billion in 1986 and further improve to 120billion in 1988 but by 1990, it would be back around 160billion dlrs."This is clearly unacceptable for the monetary authoritiesand politicians in Washington," he said.Viermetz said it was only natural that markets shouldattempt to test the credibility of the Paris accord, struckwhen 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 240yen.Viermetz said he believed major nations in Paris wanted tosee the dollar hold within a "loose range" of 1.75 to 1.90 marksand 145 to 155 yen, with any attempt to push the U.S. Currencylower 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 40years. It closed at 1.8160/70 marks.Viermetz also said he did not see the U.S. Federal fundsrate falling below six pct for fear of provoking anuncontrolled fall in the dollar.But at the same time, worries about the international debtcrisis would mean there was little chance of a rise above 6-3/4pct since this would increase loan costs to the third world.The Middle East foreign exchange conference brings togethermore than 200 traders and bank treasury chiefs from the Arabworld and Arab banks in European and U.S. Financial centres.Formal discussions, which end today, have also centred onthe role of Arab banks in world financial markets, with bankersurging them to adapt to a new global trend towardssecuritisation of business.Hikmat Nashashibi, President of the Arab BankersAssociation, said Arab banks have to shake off their oldmentality of commercial banking and concentrate more oninvestment banking.