June 25 (Bloomberg) -- Standard Life Investments, which oversees $194 billion in assets, is buying the Brazilian real and the Australian dollar, betting that a global recovery will spur demand for commodities from coal to soybeans.

The company is also selling the euro because the European Central Bank has not done enough to stimulate the region’s economy, said Ken Dickson, who oversees currency investments at the Edinburgh-based money manager. The European currency may fall by more than 2 percent within six months, he said.

“The commodity world will be the area where growth is much more likely to be longer lasting,” Dickson said in an interview. “The euro will be a poor performer.”

Manufacturers are preparing for an economic rebound by rebuilding inventories, pushing up commodity prices. That’s benefitting countries such as Australia, the world’s largest shipper of coal and iron ore, and Brazil, where almost two- thirds of exports are commodities including iron ore, oil and soybeans.

The Reuters/Jeffries CRB Index of 19 commodities advanced 8.8 percent this year, rebounding from last year’s 36 percent plunge, the worst performance in a half century. The Organization for Economic Cooperation and Development raised the forecast for its 30 members for the first time in two years yesterday.

‘Cautiously Optimistic’

“We are cautiously optimistic that the very sharp deterioration in world trade and economic growth last year will be reversed,” Dickson said.

The Brazilian real is the second best performer this year after the South African rand among the 16 most-traded currencies tracked by Bloomberg, rising 18 percent against the dollar and the euro. Australia’s currency, nicknamed the Aussie, advanced 14 percent against the U.S. dollar and 13 percent versus the euro in 2009.

Dickson favors the Brazilian currency over the rand because he says it has greater exposure to China, which he expects to lead a recovery.

Australia will also “strongly share” the benefit of the global recovery, he said. Australia’s economy will shrink less than forecast this year and grew at more than double the anticipated pace in 2010, the International Monetary Fund said yesterday.

Europe’s “slow” response to the economic crisis will eventually lower the value of the shared currency.

“We are a bit surprised it hasn’t weakened more quickly given the deteriorating economic situation, especially in regards to credit creation,” Dickson said.

‘Grim Outlook’

While raising the forecast for the combined economies of its 30 members, the Paris-based OECD cut its expectation for the 16-nation euro area yesterday. The region faces a “grim outlook” and a contraction of 4.8 percent this year, compared with a 4.1 percent predicted in March, the group said.

The ECB cut the main refinancing rate to a record low 1 percent in May. The Federal Reserve reduced its target for overnight loans between banks to a range of zero to 0.25 percent in December.

The U.S. has spent or pledged -- via loans, guarantees and asset purchases -- the equivalent of 80 percent of its $14 trillion economy, according to an April 26 report by the International Monetary Fund. Germany, France and Spain, which account for 60 percent of the euro region’s economy, have spent or pledged 22 percent, 19 percent and 23 percent of their gross domestic product.

The euro rose 2.6 percent against the dollar in the past three months and bought $1.394 as of 1:20 p.m. in London. The currency will fall to $1.37 by the end of the third quarter, according to the median of 47 analyst forecasts compiled by Bloomberg.

‘Strong Headwinds’

Standard Life Investments, a unit of insurer Standard Life Plc, said any economic recovery may not be strong enough to lure investors away from the perceived safety of the dollar.

The Dollar Index, used by the ICE to track the currency against those of six major trading partners, fell 0.7 percent this year, a decline that is “overdone,” Dickson said.

Record levels of debt among developed countries, an increase in taxes and rising unemployment will hinder growth, he said.

“Even though we expect some kind of recovery for the next couple of years, we are very aware of strong headwinds,” Dickson said. “We don’t think the U.S. is in a fantastic position. All we say is that the weakness went too far against other developed markets.”

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

Last Updated: June 25, 2009 08:37 EDT