Loonies true value is under 88 cents US index says

OTTAWA — The loonie may have slid well below parity during the past few months, but it hasn’t skidded nearly far enough, says a London-based economic organization.World Economics says at current levels of about 96 cents US, the loonie is still about 10% higher than it should be based on the currency’s purchasing power.That would mean the true value of the Canadian currency is under 88 cents US.The finding is contained in the organization’s latest World Price Index, which compares leading currencies against the U.S. greenback.According to the analysis, the most overvalued currency is the euro in France, at 28.8% above true value. Also overvalued are the Japanese yen and the Brazilian Real.Meanwhile, India, Mexico and China have the most undervalued currencies.Bank of Montreal chief economist Doug Porter says most of the calculations are similar to his own, noting that last week he put out a price comparison between U.S. and Canada that showed consumer items on average cost 10% more north of the border.Porter says his own analysis places the loonie at slightly above 90 cents US, and expects the currency to drift toward that mark in the next few years.The Canadian Press read more