Investors should buy the Canadian dollar because concern that the nation’s central bank may hurt the currency with quantitative easing is likely overblown, according to Bank of Tokyo-Mitsubishi UFJ Ltd. Bank of Canada policy makers, after cutting interest rates to a record-low 0.25 percent yesterday, will outline additional measures tomorrow. They may include printing money to buy debt assets and stimulate bank lending. “Given other quantitative-easing currency performances and given that quantitative easing in Canada is likely to be very mild, if introduced at all, we believe current U.S. dollar- Canadian dollar levels offer good selling opportunities for an eventual break below C$1.20,” Derek Halpenny, the bank’s London-based European head of global currency research, wrote today in a note to clients. Canada’s dollar was little changed at C$1.2361 against its U.S. counterpart today. Last week the currency reached the strongest in three months, C$1.1983. It subsequently fell back, partly on concern the central bank’s policies could weaken it. There are signs Canada is “emerging from the worst point of the collapse in demand,” Halpenny wrote, including an improvement in trade in February and a “more resilient” core annual inflation rate of 2 percent last month. The Bank of Canada would have to announce a program to buy C$168 billion ($135.5 billion) to C$200 billion in assets to match the aggressiveness of the U.S. and the U.K., which announced quantitative easing policies in March, Halpenny wrote. The U.S. dollar and the pound both recovered after initially depreciating when the policies were announced, he wrote.

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