Japanese Yen, Swiss Franc Winners of the Week
The Japanese yen and the Swiss franc were two of the currencies I a week ago pointed to as particularly undervalues, the two other being the Swedish krona and the Chinese yuan -they too rose on the week although less than the yen and the Swiss franc. What makes the yen and the Swiss franc so particularly interesting is the fact that money supply growth is so particularly low in these countries.
Broad money supply growth in Japan was just 1.9%, and the narrow M1 measure had in fact 0.0% growth.
Broad money supply growth in Switzerland was even lower, at 0.9%, and M1 actually shrinking.
Compare this to the double digit money supply growth in the U.S. and Euro area and most other economies, and it is clear why the yen and the Swiss franc should be considered relatively sound currencies.