Up, up, she goes!

[maplesyrup]

Canadian dollar hits 8-month high

What's going on here anyway?

Why does our Bank of Canada feel they have to raise interest rates so much higher than the US. I mean I don't mind the closeness to parity with the US dollar, but is this really in Canada's interest?

[Slavik44]

Canadian dollar hits 8-month high

What's going on here anyway?

Why does our Bank of Canada feel they have to raise interest rates so much higher than the US. I mean I don't mind the closeness to parity with the US dollar, but is this really in Canada's interest?

Most economists are convinced the Bank of Canada will increase its key interest rate again when it holds its next policy setting meeting Oct. 19....and make Canadian bonds more attractive to foreign investors.

[August1991]

In addition to the Bank of Canada's actions, the Canadian dollar tracks fairly closely the world price of crude.

But a warning: I noticed a sign today at Tim Horton's. They are raising their prices "because of rising operational costs".

The Bank should stop fiddling with the knob. It doesn't really do anything; it confuses people and everyone knows what happens if you fiddle with something.

[maplesyrup]

But why are they raising our interest rates?

If it is so important shouldn't that be debated in Parliament?

[Slavik44]

But why are they raising our interest rates?

If it is so important shouldn't that be debated in Parliament?

But it is the divine right of banks to screw around with our money.

[playfullfellow]

But it is the divine right of banks to screw around with our money.

Don't forget that it is also their divine right to charge service fees for every little detail, decrease services and give management astronomical wage increases and bonus for coming up with these money making ideas. Banks have come to expect to make a certain amount of profit each year and they are in a situation where they can write their own rules to make money. As long as we don't have a repeat of the 80's, there isn't much we can do about it except to shop around for the best deals in town.

[daniel]

Pardon if I am a little off with my economic theory but these are the several reasons why interest rates change.

1) Canadian dollar - like it or not, the Canadian dollar i(as with many of the other currencies of the world) is in competition with the US dollar. Canadian rates must be slightly higher than the US's so that we can attract investors to lend the Canadian government money at better rates instead of having them all flock to lend to the US government their money. This loan is what keeps maintains our social spending as well as other government obligations.

2) Inflation: Ever since the days of Chretien, Clinton, and Rae, the economy has been growing steadily. Classically, such growth cannot be sustained for such a long time without the inflation taking over. When the economy becomes overheated with excess growth, inflation devaluates the currency all goods become relatively more expensive and the currency becomes less attractive in the international market especially to bond holders and fixed income individuals. Hence, in a healthy growing economy, you keep an eye on the growth by introducing a control mechanism - money supply in the form of higher interest rates. You don't want to raise rates so high that it'll turn off investors who need to borrow money. Such a case would choke the economy. Another form of control is when the Federal Bank directly participates in the currency trading market by buying back (or putting up for sale) some of its own currency. As supply shrinks or grow, so does (inversely) the value of the currency and then inflation.

You want a lending rate that can sustain the balance between investors who want to lend and investors who want to borrow. Note: none of this has to do with employment no matter what the politicians say. As I recall from Economics 100, I'll never forget what my professor stated: "When there is a choice between low interest/low inflation vs low unemployment, the choice is always low interest."

3) The Canadian dollar hasn't been this high since the mid '80s(?). It's not the fact the Canadian dollar has increased so much, it's the American dollar that sunk. Think what you want about Bush being the better choice over Kerry (or whatever), international currency traders (including American traders) have devalued the USD since Bush's war on Iraq. Is it because $1billion per week to support the Iraq occupation coupled with low-interest paying bonds are too high risk to invest? Some Canadians cheer at the rising dollar, other shudder. It depends if you are a buyer or a seller in international trade with the biggest economy in the world. It's not the actual value or difference in value of the currencies that matter, but the rate of change of the currency differences. What you borrow today, might not be able to be paid back tomorrow. Or what you lend today may not be worth tomorrow what the face value currently states.

Canadian buyers may enjoy cheaper imported goods from the US, but if the US currency devaluates so much that investors stop investing, inflation takes over (in a falling economy) - or worse deflation, the economies of Canada as well as other trading partners of the US will come to a halt too.

Hence, the US increases the interest rates to attract investors (lendors) towards their own currency. And then we get back to point #1 why Canada adjusts its own interest rate.

[maplesyrup]

Do people here think we are heading for parity with the US dollar , as it now approaching 80 cents?

At one time the Canadian dollar was worth more than the US dollar. Ours really has been in the doldrums for years, but recently it seems to be rebounding.

[ceemes]

Do people here think we are heading for parity with the US dollar , as it now approaching 80 cents?

At one time the Canadian dollar was worth more than the US dollar. Ours really has been in the doldrums for years, but recently it seems to be rebounding.

I well remember a time in the early 70's when the Canadian Dollar was worth US$1.10

[August1991]

The Canadian dollar hasn't been this high since the mid '80s(?). It's not the fact the Canadian dollar has increased so much, it's the American dollar that sunk.

I agree. The world is getting used to a new reserve currency, the euro. If you think the Canadian dollar has risen, the rise of the euro has been greater. (In fact, it's been something of a roller-coaster.) The high price of oil is also a factor.

If I'm not mistaken, Canada's productivity growth has been lower than in the US for the past 20 years or so.

Any discussion of interest rates should make explicit real rates and nominal rates.

[maplesyrup]

Always the naysayer about Canada, eh!

Strong economy pushing loonie upward

As Trudeau, a man with a vision suggested, Canada needs to detatch itself as much as possible from the US economically, as their economy goes down the toilet with Bush's astronomical deficit.

Canadians have too many eggs in the proverbial US basket. :angry:

[maplesyrup]

What's our dollar now, 78 cents US.

I am going to forecast 85 cents US by Christmas.

Go Canada Go!

[August1991]

I am going to forecast 85 cents US by Christmas.

Go Canada Go!

It is unfortunate that your viewpoint is shared by so many, including Toronto Star journalists apparently.

For everyone who buys, there is someone who sells. It is not good for the Canadian dollar to be high nor is it bad for it to be low.

I wonder though whether we should fix it on the US dollar as we did between 1962 and 1970.

[The Terrible Sweal]

Do people here think we are heading for parity with the US dollar , as it now approaching 80 cents?

At one time the Canadian dollar was worth more than the US dollar. Ours really has been in the doldrums for years, but recently it seems to be rebounding.

If they get four more years of Bush policies, our dollar will be higher than theirs by the end of that time.

Vote for Bush, short the Buck.

[maplesyrup]

Right. Sell another part of our sovereignty to a dying empire, the US. What percentage of our trade is with the US - 85% or is it 90%. We need to seriously look at ways to reduce that to 50% or even less if we are to remain a healthy vibrant society. I guess there are some Canadians who will always want an Avro Arrow economy.

The Avro Arrow: Canada's Broken Dream

Basically if your dollar appreciates your country is doing better than others in the eyes of investors as they study the risk factors.

For everyone who buys, there is someone who sells. It is not good for the Canadian dollar to be high nor is it bad for it to be low.

I wonder though whether we should fix it on the US dollar as we did between 1962 and 1970.

I'll take a higher Canadian dollar anytime thank you, and so will the vast majority of Canadians.

[JWayne625]

If any empire is dying it certainly isn't the US. In fact most of our manufactured goods come from US based corporations. Remember back before all these Free-Trade deals that our politicians told us were good for us, and once signed many of our manufacturing jobs disappeared, to be replaced by service industry jobs that pay only a fraction of what manufacturing sector jobs pay. These deals were good only for the corporate sector, because it made it easier for these corporation to move their operations to somewhere where they could pay employees a fraction of what it cost them here in Canada.

If Canadian's were smart, which we aren't, we would start checking the labels on the manufactured goods that we purchase, and bypass any goods not made either in Canada or in the USA. If Canadian's don't soon smarten up nothing will be manufactured here, and when the call centre jobs dry up we will have nothing left to work at. We will wind up being the third world. We already have many adults and children in this country going to bed hungry, and that is shameful. Considering it was 14 years ago that our federal government made a committment to eliminate child poverty in this country, and by last statistics it shows that the problem just keeps getting worse. Use of food banks and soup kitchens in this country seems to be the only industry that is growing. Shame on us and our politicians, both federally and provincially.

[maplesyrup]

Canada is a wonderful country, and yes we have some problems, but the sooner we cut loose from the US the better. Who needs them? Everywhere they go they stink up the place The US reminds me of the movie "Trailer Park Boys"

[Newfie Canadian]

Alas, the story of the Arrow brings a tear to my eye everytime I think about it.

Diefenbaker really screwed that one up.

Had the most advanced aircraft in the world, scrapped them, then bought used aircraft from the US.

Question is, did we learn a lesson?

[maplesyrup]

Newfie Canadian.....welcome, and that's a great Trudeau quote. Jeez I miss him.

[Newfie Canadian]

Thanks maplesyrup.

He was a great PM, as far as I am concerned. Always liked him.

[caesar]

A higher Canadian dollars hurts lumber sales. I believe.

Is our dollar rising or is it the American dollar falling,

[Newfie Canadian]

A higher Canadian dollar hurts a lot of things, incuding tourism, movie and television productions and countless goods.

I've always liked it at the 75 cent US mark.

[maplesyrup]

Loonie hits 11-year high

The loonie closed at 78.75 cents US (up 0.15 cents US), eclipsing the Jan. 9 close of 78.67 cents US, which had been the most recent high close.

Wednesday's closing price for the Canadian dollar was the highest for the loonie since May 27, 1993, when it closed at 78.99 cents US.

FROM SEP. 20, 2004: Dodge says more rate hikes to come

At one point during trading Wednesday, the dollar changed hands as high as 78.88 cents US.

Exporters are going to be challenged in the coming years, but travellers like me are delighted with the appreciation in the value of our Canadian dollar. South America, Europe, Hawaii, and the South Pacific, here I come.

Go Canada Go!

[maplesyrup]

One complicating factor is the rising price of fuel, which adds to travel costs.

Does anyone know what the price of those Mini Coopers are in Canada?

[maplesyrup]

Last night canuck dolla closed at $US0.7927.

Will it hit 80 cents this week?

This is a very good sign for our Canadian economy, and for my trips to the US and abroad next year.

I forecast a 85 cent canuck dolla soon, maybe by New Year's Eve.