July 27, 2009
The Canadian dollar is once again trading above 92 cents U.S and given the nature of currency futures trading it is quite likely so long as optimism about the ending of the recession continues to be validated by real data that the dollar will rise higher, possibly to close to or even above parity in the next month or two. Certainly 95 cents U.S. is a level that is within grasp in the near future. This will be good news for travellers to the U.S., importers of goods and technology and services but difficult for exporters. The Bank of Canada will find its job complicated by the rise in the exchange rate and may try to talk the dollar down. But I suspect as the recovery grows we will have to adjust to this higher trading level for the currency. It will make tough adjustments for the export industries but it will also ensure that the central bank will not be too quick to raise interest rates for some time to come
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