Bank of Canada Pushes Loonie Down
After trading near parity with the U.S. dollar this month, the Canadian dollar was pushed away from equality with the greenback as the national central bank published a report on the subject, as well as stocks and commodities declined today.
Several events extended losses for the Canadian dollar versus most of the 16 main traded currencies, specially the pound and the U.S. dollar, starting with Bank of Canada declaration suggesting that interest rates will remain low in the country as long as inflation doesn’t rebound, as well as another warning showing concerns regarding the current Canadian dollar strength. The loonie’s attractiveness has been deeply affected since the Bank of Canada started to indicate that a strong currency can be an obstacle for the economic rebound in the country, and that interventions will be taken if the currency rally reaches unwelcome levels, fact which has been playing a major role in this week’s decline for the Canadian dollar.
Not only Bank of Canada’s position affected the loonie today, but also a negative day in equities and commodities markets, according to specialists. Differently for other commodity-linked currencies like the Australian dollar, the current loonie rally is being interpreted as a problem for the future of the Canadian economy, as it is likely that its rates will be synthetically influenced by the national central bank in the short-term future.
USD/CAD traded at 1.0461 as of 15:09 GMT from 1.0403 yesterday.
If you want to comment on the Canadian dollar’s recent action or have any questions regarding this currency, please, feel free to reply below.
Earlier News About the Canadian Dollar:
- Bank of Canada Takes Measures to Force Loonie Down (2009-10-20)
- Canadian Dollar Near Parity With Greenback (2009-10-20)
- Canadian Dollar Farther From Parity With Greenback on Stocks (2009-10-16)
- Canadian Dollar Near 1-to-1 With Greenback (2009-10-13)
- Canadian Dollar Falls from Record High on Market Confusion (2009-10-07)
October 24th, 2009 at 10:00 pm
It is a sad state of affaires when the only control anyone has to economic recovery is to subsidize Canadian business on the backs of Canadian taxpayers through the manipulation of the loonies international value. Canadians for too long have been the brunt of a sterile business plan that is only interested in taking the easy way out. As part of free trade the loonie is suppose to operate in the free market unfettered by artificial influences and doom and gloom threats from Ottawa. It is a travesty how the BOC has been enlisted by the Gov’t to deflect an unpopular and ill concieved therapy for the loonie. Canadas strength is based on only two sources, commodities and its people, the real value of these are not subject to manipulatiuon now but when big business is pushed to the limits maybe just maybe those luxuries will be manipulated to. Canadian consumers deserve parity as most of what we buy is imported. Canadian industry must lower its costs so as to make whatever products we manufacture here more cost competative so as to stymie shopping sprees into the USA. Most of what Canadians buy over there is not available in Canada anyway so who is getting hurt by all this? There was a financial advisor sometime ago that stated: The quicker you can consolidate your Canadian assets in cash and move to a more tax free country the sooner you’ll be in control of your destiny. The Canadian model provides for a median form of comfort but never to the extent of economic freedom.
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Andrei Moraru Reply:
October 24th, 2009 at 10:43 pm
I guess that for the majority of the Canadians (the citizens of the export-based economy) the depreciation of the currency will lead to the higher levels of prosperity, which will offset the elevated import prices. So, that’s not so sad after all.
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