In testimony before the Mexican Senate, central bank Governor Agustin Carstens stated that the appreciation of the Peso was in line with fundamentals of the Mexican economy, and that the Peso would continue to strengthen so long as Mexico posted high growth relative to the United States, and maintained sound public finances. When asked point blank if the Peso was overvalued, Carstens pointed towards the 11.5 low of July 2011, stating that USD/MXN was still significantly above that level. Carstens also highlighted large foreign reserve purchases have helped keep the peso from soaring even higher, stating that without this intervention, USD/MXN would probably already be at 10. Petreleos de Mexico, the state owned oil monopoly, exchanges dollars at the central bank rather than on the open market in a special program to help lessen volatility of the Mexican currency.
These comments are largely in line with Carstens speech earlier this year. At an event sponsored by the Singapore Monetary Authority, Carstens warned of a perfect storm of capital flows flooding emerging markets. Carstens warning that slow growth in advanced economies coupled with extremely accommodative monetary policy may drive investors into emerging market debt and equities, Carstens stated that, "the appetite for risk has returned and the quest for yield is in full force."
In Australia, the RBA has held firm on eschewing calls to weaken AUD despite cries from exporters. "This is the hand we've been dealt," commented a deputy RBA governor, stating there was little that a relatively small country like Australia could do to weaken AUD without significant risk of causing a panic. A commodity boom, high yield, and a AAA sovereign debt rating has made the Aussie an investor favorite for the past three years. Australia is the fastest growing economy among advanced nations, and avoided entering a technical recession in 2009. The RBA was one of the first central banks to raise rates after the 2008 collapse.
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