FX COLUMN-Short Swiss francs/long Mexico peso may yield returns

miércoles 8 de octubre de 2014 06:58 GYT

-- Neal Kimberley is an FX market analyst for Reuters. The opinions expressed are his own --

By Neal Kimberley

LONDON, Oct 8 (Reuters) - Selling the Swiss franc versus the Mexican peso may not be an everyday foreign exchange play but divergent economic outlooks coupled with a positive yield might make it attractive to some forex traders.

Mexico's central bank cut interest rates to a record low in June, but at 3 percent that's a world away from Switzerland's zero rate policy and the possible resort to negative interest rates alluded to by the Swiss National Bank (SNB) on Sept. 29.

Switzerland's policymakers will have noted the country's first fall in consumer prices - down 0.1 percent in September - since February.

The deflationary pressure was imported, with the price of goods brought into Switzerland falling by 1.2 percent compared to the same month last year, while domestic goods prices posted growth of 0.3 percent.

Swiss inflation graphic: link.reuters.com/kuj84s

A weaker Swiss franc, which negative rates would hasten, would lean against imported inflation by making the cost of foreign currency-denominated imports more expensive in local currency terms.   Continuación...