Merrill Lynch & Co., Dresdner Kleinwort Group Ltd., and Deutsche Bank AG economists have been wrong all year in calling for the dollar to tumble against the Japanese yen.

The only firms to consistently predict the dollar’s strength are Bank of Tokyo-Mitsubishi UFJ Ltd. and Red-Tower Ltd., a seven-person boutique based on 10 acres of farmland in Montrose, Scotland. The other 51 firms Bloomberg surveyed at the beginning of 2006 either said the dollar would drop or revised forecasts lower in April.

“We keep our faith in the dollar,” the senior currency strategist at Bank of Tokyo-Mitsubishi UFJ Ltd., Derek Halpenny, said in an interview from his office in London.”Growth in the fourth quarter will pick up. The U.S. still has a very attractive yield structure to help underpin the dollar.”

The dollar, after erasing a 7.9% decline since May, will rise to 121 yen as falling energy prices spur consumer spending and boost prospects for more Federal Reserve interest rate increases, Mr. Halpenny said. Gerry Celaya, chief strategist at RedTower, predicts the dollar will strengthen 3.7% to end the year at 122 yen. The dollar dropped 1% last week to 117.60 yen.

Merrill, the world’s biggest brokerage, and Dresdner Kleinwort, the investment banking arm of Munichbased Allianz SE, are the biggest bears. They forecast in Bloomberg’s survey this month that the yen will end the year at 107.

Deutsche Bank, the world’s largest currency trading bank, anticipates the yen strengthening to 108. The median forecast in the poll of 43 analysts and traders is for the dollar to weaken to 114 yen, a 3% drop, by December 31.

Mr. Halpenny says the yen will end the year at 121. Investors making that bet would gain about 2.9% by year-end from the current level. Bank of Tokyo-Mitsubishi and RedTower have said all year that the yen, which began the year at 117.75, would end 2006 at 120 or higher.

Investors who followed Merrill’s forecast to bet that the dollar would drop to 107 yen by year-end and it stays at its current level of 117.60 yen, they will lose about 9%.

Bank of Tokyo-Mitsubishi, Japan’s biggest bank by assets, and research and trading firm RedTower, were among eight of the 53 firms polled by Bloomberg in January to predict the dollar would reach at least 120 yen at yearend. In July, only two companies — ECU Group and Nomura International — still agreed with them. By October, they were the only firms sticking with that forecast.

The survey’s consensus in January was for a 6% drop this year. The dollar has gained four straight months since May 31, the longest winning streak against the yen since the period ended July 2003.

The median forecast in the Bloomberg polls also shifted in favor of dollar bulls. The January median forecast was for the dollar to slip to 110 yen. By July, the market grew more bearish, predicting a decline to 108 yen. This month’s survey was less bearish, with a median forecast of 114 yen by December 31.

Bank of Tokyo and RedTower shrugged off a drop in the dollar to an eight-month low of 109 yen in May after the Group of Seven most industrialized nations called on Asian nations to let their currencies appreciate. Instead, both predicted that American interest rates would remain the highest among the G-7 nations, encouraging overseas investors to buy American assets and boosting the dollar.