* Weaker U.S. dollar is part of global rebalancing

* Certain global currencies will overappreciate (Updates with comments on currencies, emerging markets)

Pav Jordan and Wojtek Dabrowski | Reuters.com

TORONTO, Oct 9 (Reuters) – Mohamed El-Erian, the chief executive of bond giant PIMCO, said on Friday the global economic system will not likely reset to where it was before the financial crisis, and a new world order may shift the hierarchy of currencies.

The U.S. dollar will likely depreciate in a global rebalancing, while the euro, yen, Canadian dollar and certain emerging-economy currencies, like the Brazilian real, will gain in value, likely overappreciating, he said.

“A Weaker U.S. dollar is part of the global rebalancing,” El-Erian told economists and analysts in a speech, “Investing in the New Normal”, in Toronto’s financial district.

“Certain countries are going to overappreciate because they are carrying the burden of appreciation for others,” he said, pointing to currencies like China’s that will not gain value.

El-Erian likened the recovery from the global economic crisis to a roomful of people who, deprived of oxygen, collapse. When oxygen is pumped back into the room, victims regain consciousness and get to their feet at different rates, depending on their levels of physical fitness.

Emerging economies that have fared better in the crisis may take up the reins where U.S. consumers left off, he said.

“They have the wallet to be the consumer of first resort for the global economy, and my hope is that they also have the will to be the consumer of first resort.”

The summer rally in equity markets and recent optimism for an economic recovery in the United States and other economies leveled by the crisis may be short-lived, he cautioned, and could peter out if government stimulus and an inventory cycle are not joined by consumer demand.

He said growth potential in the United States and globally would not soon return to pre-crisis levels. One of the consequences will be much stricter regulation, characterized by increased capitalization requirements — and demand for a much higher level of trust from consumers.

Regime changes at corporations will become more commonplace.

Stress will continue on the U.S. labor market, and labor will not be as flexible as in the past.

“When you disrupt the core, the circuit breakers do not work,” El-Erian said.

“We will not reset to where we were before.” (Reporting by Pav Jordan and Wojtek Dabrowski; writing by Jeffrey Hodgson; editing by Rob Wilson)