Mexican Peso Erases Early Declines, Swiss Franc Declines and Canadian Dollar May be undervalued

The major currency of Mexico, Mexican Peso was able to erase its earlier declines after an official of the Federal Reserve supported the policy of maintaining a monetary stimulus program which has buoyed the assets of the emerging markets. Mexican Peso was more or less unchanged on today as it is currently priced at 12.3013 per USD. It earlier went down by 0.8%. In 2013, Mexican Peso has increased by 4.4%.

James Bullard, the President of the St. Louis Fed stated that the Central Bank of US should continue with the bond buying program as it is the best available option for the policy makers for giving the lower than expected growth a boost. Bullard will be voting on the Federal Open Market Committee in 2013 and that is responsible for setting policies.

Yield on the Mexican Peso bonds which are due in 2024 went down by a single basis point and the same is currently at 4.75%. The price has increased by 0.13 Centavo and is at 146.69 Centavos for each Mexican Peso.

On the other hand, the major currency of Switzerland, Swiss Franc declined to a value that’s the lowest in last 4 months after tumbling by 0.6% against Euro. It is currently priced at 1.2529 per Euro, marking its weakest level since 18th January. Against USD, Swiss Franc went down by 0.6% and is currently at 97.35 Centimes per USD.

Incidentally, the International Monetary Fund has mentioned that as the bank has introduced negative interest rate on the excess deposits, it may help to cool down the real estate market of this European country.

Chief Economist of the Bank of Montreal, Doug Porter stated that Canadian Dollar is currently overvalued by 5%-10% if the levels of commodity prices are taken into consideration. Porter added that Canadian Dollar will continue to be supported by the safe haven flows in the next 2 years as well. Thereby, the currency will be trading near parity with the USD before weakening is experienced in the medium term basis.

Porter thinks that the Bank of Canada should not be showing any kind of urgency for increasing the interest rates. According to Porter, there is a case for the Central Bank of this country to drop the tightening bias as the housing market has cooled down off late.