This paper examines the factors that contributed to the rise in the Canadian dollar in 2003. Economic theory and empirical evidence have identified a number of factors known to affect movements in exchange rates.
In general, the value of the Canadian dollar relative to the US dollar is influenced by two distinct categories of catalyst. Perhaps the most significant domestic influence on the Canadian dollar is the relative health of the Canadian economy. The difference between interest rates in Canada and the United States is also a major determinant of the exchange rate between the two currencies. Differences in inflation rates between Canada and the United States also affect currency movements in the long term. The current account measures the flow of goods, services and investment income between Canada and the rest of the world. A current account surplus means that since Canada is selling more than it is buying, there is a net flow of money into Canada. Because Canada is a large producer and net exporter of resource-based goods, the Canadian dollar is often referred to as a commodity-based currency. That the rise in the Canadian dollar is in large part a US-based phenomenon is evident in the fact that the Canadian dollar is not the only currency to have appreciated against the US dollar since 2002. The significant difference between the performance of these (and other) currencies and that of the Canadian dollar is the period in which the bulk of the currency appreciation took place. Energy prices have been considerably more volatile than non-energy commodity prices, but they too are having an impact on the Canadian dollar. Moreover, some believe that the influence of energy prices on the Canadian dollar is increasing as Canada continues to grow as a producer and exporter of energy.
As a member of the International Monetary Fund (IMF), Canada was committed to the Bretton Woods system of fixed exchange rates.
In this report, the exchange rate refers to the cost, in Canadian dollars, of buying a unit of foreign currency.
The Canadian dollar would, in all likelihood, rise against the currencies of other slower growing economies. As stated earlier, however, economic growth differentials between Canada and the United States also affect the value of the Canadian dollar. Stewart Elgie and Jessica McClay of the University of Ottawa have a peer-reviewed article in press in a special issue of the journal Canadian Public Policy. Fuel consumption per capita has fallen in BC by nearly 19% relative to the rest of Canada; these are just the fuels that are subject to the carbon tax. Note that all fuel use for the various types of fuel fell faster per-capita in BC than for the rest of Canada. Prior to the introduction of the carbon tax in BC, fuel use was already declining faster in BC than in the rest of Canada. Greenhouse gas emissions data are gathered by Environment Canada and lag one year behind the fuel use data. The economic data, which also only go up to 2011, show no big differences in performance between BC and the rest of Canada. Tom, KR, Philippe,I disagree on a couple of points.One is that I think the data show that BC same-day crossing have gone up faster than elsewhere in Canada. Pound dollar forecasts 2015: morgan stanley, hsbc, Pound to us dollar exchange rate forecasts from goldman sachs, barclays and hsbc for 2015. If you are a currency converter you should look for signs from the Bank of Canada hinting a lower interest rate in the near future.
Bank of Canada speaks about risks such as the risks associated with housing market, oil industry, and high debt. All these signs above will suggest to money converter a weaker Canadian economy and a weaker Canadian dollar. Foreign exchange traders can get their hands on the quarterly monetary policy report by the Bank of Canada tomorrow at 10 a.m.
That decision was made in response to growing concerns about inflationary pressures in Canada and a rising level of foreign indebtedness.
Indeed, economic indicators had pointed toward a higher Canadian dollar for a number of years before its eventual rise. In the 2011 national election, the percentage who voted for Stephen Harper’s Conservative Party was greater in BC than in Canada as a whole. This decrease was due to markets being worried about the Bank of Canada lowering or hinting towards lowering the present interest rate. Table427-0005 - Number of international travellers entering or returning to Canada, by province of entry, seasonally adjusted, monthly (persons), CANSIM (database). In addition, today Statistics Canada released manufacturing sales numbers which showed a decline by 1.4%, a decline for a second consecutive month. US investment bank Morgan Stanley has said that they believe there is a one in three chance that the Bank of Canada will cut its interest rates before year’s end. BTW, taking two monthly meausurements ~5 years to define a trend is known to be poor analysis, esp.
I would be interested to see data that shows the trend clearer, but a cursory view seems to show that the 19% reduction is not explained by filling up south of the line. But the relative rate of cross-border trips from BC has not increased (it has decreased) relative to Canada overall during the period of the carbon tax, nor for that matter has Ontarios as far as I can see. These are rough calculations only and are dependent on my assumptions, so please treat them as provisional.
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