Forex Blog: Currency Trading News & Analysis.

February 15th 2005

Canadian Central Bank ponders interest rate hike

Canada is a nation rich in natural resources. Accordingly, its economy has benefited from recent spikes in commodity prices, coupled with a broad increase in demand for raw materials. Unfortunately for Canada, this increase in demand has exerted upward pressure on its currency (CAD), which could  plausibly lead to a reduction in future foreign demand for its products. The result is something of a catch-22: present increases in exports may be offset by future decreases. In response, the Canadian Central Bank will forgo a planned hike in exchange rates, and instead wait until the Canadian Dollar (hopefully) depreciates relative to the USD. Mellon Financial Reports:

General USD movement…is problematic, as the economy is penalised by the stronger CAD, without benefiting from higher demand for Canadian products.

Read More in a report published by Mellon Financial.

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Posted by Adam Kritzer | in Major Currencies | 1 Comment »

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One Review of “Canadian Central Bank ponders interest rate hike”

  1. George Harb Says:

    Dear Sirs,
    could you please tell me why the spot rate of a canadian dollar should be settled with the US dollar on the first following business day instead of the second following business day.
    Thank you

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