USD currency value will not likely continue to decline rapidly vs.the Yen nor the Euro nor the Ren Mi Bi from now in Oct 2009 to mid 2010. It is in the best interests of China to keep the USD strong or at least stable/stagnant against other key global currencies as well as the Ren Mi Bi. Why? It is simply because China's central bank holds way too much USD-denominated US-Treasury bonds as reserves, and therefore any further decline in USD value will not be good to China's wealth.
It is also in the best interest of Japan not to let the USD keep falling since the expensive Yen is now taking a toll on Japanese exports/ (Who wants to import and buy Japanese products in the US if the exchange rate is way too high?) Japanese exporters are facing not only an expensive Yen vs. USD exchange rate but also significant competition from Chinese exporters and other Asia Pacific exporters. Furthermore, Japan is the second biggest holder of USD-denominated US-Treasury bonds behind China. Hence, the catastrophic view by many forex forecasters that USD will continue to decline rapidly (after a huge 15% decline so far in 2009) is, in my view, too pessimistic and unwarranted at least between now and mid 2010.
This does not mean USD's value will right away go back up rapidly against the Euro, Yen, Pound, South Korean Won, Australian Dollar, and Swiss Frank, etc. Instead, we foresee that USD currency value will fluctuate within a horizontal range (stagnation or slight decline of 5% decline per year max over the next 10 years but not declining too much further this year and in 2010) vs. other key global currencies which will allow US exporters to take advantage to rejuvenate and grow their export to Asia Pacific, Japan, and the Euro zone. This is why the US trade deficits have been declining almost every month in year 2009 -- a favorable fact to US economic recovery process that investors should be well aware of.