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Canadian$ Reaching Parity With US$





Soltair
I do not know if you had a look at the canadian dollar value recently but it is getting quite close to the American dollar. If it keeps up that way, experts say that we could reach parity before the end of the year. That would be the first time since the 70s.

What do you think of this outside Canada? Is our Prime Minister right to encourage such a process? Will it affect your vision of Canada (if any)? Do you think that we're stupid to let this happen or that it is a good thing for our economy?

I'd just like to know what do you think of all this, especially in the US.

By the way at this precise time the currency is:

Code:
Live rates at 2007.06.23 11:05:16 UTC 
1.00 CAD = 0.936686 USD
Simplechat
Interesting. You wouldn't expect such a small country (comparitively) to be on nearly equal footing with a superpower.

How exactly does canada fare compared to america? (GDP, etc)
Soltair
Confused I'm not sure, what is GDP?

Canada is still a very industrialized country and part of the G8. However, I agree that we have been left at the 11th or 12th rank regarding economical power. Still, we are very well ranked in many ways, like human development, life quality and the likes.

I'm a francophone and yet do not understand everything, but I'll try to figure out what you exactly mean. If fare refers to taxation and imposition, you must know that we are a federation that groups 10 provinces. Every province might put some taxation, and the federal governement also has its own taxes. In Alberta, the second province starting from the Pacific Ocean, there is much oil and the economy runs like crazy. People there pay very little taxes, and it was the first province to get rid in full of its debt (and the only one up to now). They even distribute money every year to the people there! But the life is costly.

Here, in Quebec, where most of the french-speaking canadians live, we rather tend to have high taxes because both the federal and provincial levels have taxes. However, our system implies much more structures than the Albertan one, which is more similar to the American system. Canada has some measures that require such taxation, like public health system or individual subventions.

If this was not what you meant, I'm sorry and I'll try to answer again. Wink
nilsmo
Soltair wrote:
Confused I'm not sure, what is GDP?

GDP stands for gross domestic product. It is the sum of all good/services produced in a country. Canada's is obviously lower than the US because it has many times less people.

Quote:
Interesting. You wouldn't expect such a small country (comparitively) to be on nearly equal footing with a superpower.

This doesn't mean Canada is on equal footing. It just means one unit of their currency is about the same as one unit of US currency. Units vary in different countries simply by definition. In Turkey for example, the government removed the last three zeros from all currencies, making its unit (Lira) one thousand times more expensive.

Anyway, Canada is about as rich as the United States, though most statistics (like GDP per person) will tell you the average American has more money. However, in terms of quality of life many statistics say the average Canadian has a better quality of life than the average American (e.g. the UN human development index).

Also, an additional note: the US currency has been becoming cheaper and cheaper in the last several years. For example the Euro is worth more than a dollar now.
bogger
The comparative value of currencies is based upon the export import ratio in between them, the terms of trade, mostly...

Canada's terms of trade have been increasing recently, because of the rising value of oil, and the oil sands in alberta (I think). Which has thus raised the value compared to the USA, a net importer of oil.

Also, china is keeping the dollar's value high by buying a shit load of dollars, so as to keep the chinese yuan low compared, to help their term's of trade... if they stop that, USA will plummet
richard270384
The Australian dollar (AUD) is also slowly catching up on the US dollar (USD). Its not quite as close as the Canadian dollar - 1 AUD is buying 0.8578 USD.

Thats pretty high considering that a couple of years ago it dropped below 0.5 USD.

Does anybody else think that maybe the Canadian dollar and AUD have not really strengthened in any way, but instead the USD has somehow weakened against all foreign currencies?

How is the Canadian dollar fairing against other major currencies/major trading partner's currencies? Has it remained somewhat stable or is the Canadian dollar also rising against those?

What do you think could have weakened the USD? The war in Iraq?

Any thoughts?

Cheers,
bogger
@richard,

Fiscal irresponsibility Smile
imagefree
If there are more Exports than imports of your country in the next few months, and also foreign exchange is not leaking by other ways (like if you hire other countrie's citizen's services and you pay them in Foreign Exchange) and in nut shell your balance of payments is Favourable, then i am sure that your currency's price will increase.

But there is 1 more thing your GOVT has to do, that is to keep economic stability and keep investers happy. If investors are not happy, you cant get your goal of achieving the target of 1CAD=1USD .
imagefree
Simplechat wrote:
Interesting. You wouldn't expect such a small country (comparitively) to be on nearly equal footing with a superpower.

How exactly does canada fare compared to america? (GDP, etc)



It doesnt mean that of America is Superpower then its currency value will always keep the highest. Dozens of countries have currency value higher than that of USD.

1 more thing that comparison of Currency prices and the policies on this are not based on GDP. In other words there is nothing to do with GDP, per capita income etc when planning for the prospactive prices of currency ( means how much exports and imports should be and what will be the balance of trade and what will be the balace of payment).
However GNP may be considered for this because it involves foreign remittances.
LumberJack
GDP and GNP (if you want to be picky) does come into play. But, there are lots of factors that determine the value of a currency. Prices of a certain countries exports, if that country is a oil exporter or importer. Whether the country is at war or not. If interest rates have been raised or lowered. It goes on and on.

Canada's $ has been increasing due to the US $ dropping, due to fiscal/economic policies and indicators. In Canada, oil AND natural resources is also playing a large role. Canadian dollar has always been consider a resource based currency.

I personally don't think it is necessarily bad that we reach parity, what is bad is how quickly we are reaching parity (or close too parity). The Canadian dollar will be increasing when the Bank of Canada raises interest rates again on Tuesday. The problem Canada has, is that only certain economies are benefiting from the dollar raising. That leaves David Dodge in a bit of a bind, do I raise, do I maintain the interest rate. Smile He will raise though Wink
Soltair
richard270384 wrote:
The Australian dollar (AUD) is also slowly catching up on the US dollar (USD). Its not quite as close as the Canadian dollar - 1 AUD is buying 0.8578 USD.

Thats pretty high considering that a couple of years ago it dropped below 0.5 USD.

Does anybody else think that maybe the Canadian dollar and AUD have not really strengthened in any way, but instead the USD has somehow weakened against all foreign currencies?

How is the Canadian dollar fairing against other major currencies/major trading partner's currencies? Has it remained somewhat stable or is the Canadian dollar also rising against those?


I've read (sorry for my bad memory, cannot quite say where) that New-Zealand, Canada and Australia's currencies were all gaining value these days, and were among the best growing currencies right now (speculators take note!). As far as I remember, only Norwegian crown and another few currencies did not loose value compared to Canadian dollar.

Also, to answer to imagefree, our Prime Minister, Stephen Harper, surprisingly supported this raising of our currency despite the fact that we are a majorly exportating economy. Not sure why, but the cause has all its support.

What remains sure is that despite the economy might seem very healthy from outside, it really depends from where you are looking at: Alberta (which is the big oil exportator, you're right) goes throught an unprecedented development process, while manufactures all around the country are currently meeting serious problems. Guess something will have to be done about it someday: Canada counts a lot on its ressources to survive, but as manufactures do not work anymore, we'll also have to get a serious look on the technological sector, where rising economies like China may not be a serious "treath".
poly
That s really cool, just not for US- americans...
Soltair
Well that's not so true, consider that this situation will bring new money in your country as Canadian will travel there due to the cash bonus. And for our tourism, these aren't great news: less American people will travel in Canada. Back in the 70s, where both currencies were on equal foot, I guess! Wink
adnansaleemsandhila
well all i know is that its a good time to buy usd/cad in forex market. with a potential of 2000 pips in an year or so. good luck with trading
jmwarshay
I live in the Detroit, Michigan, area. For many years, there have been many Ontario license plates in the parking lots of our shopping centers (centres for Canadian readers). We are across the Detroit River from Windsor (and the only US city due north of a Canadian city, at least outside of Alaska). Port Huron also has many Canadian shoppers. Canadians began coming here when the federal government imposed a VAT (value-added tax). Combined with Ontario sales tax, it added about 15% to the price of goods. Canadian shoppers were plentiful when the Canadian dollar was worth less than US $0.70. Now with the Canadian dollar over US$0.90, the prices here must be even more attractive. (In the 1970's, the Canadian dollar was worth more than the US dollar.)

True, trips to Canada will cost more, and Toronto is a wonderful city to visit. However, many Canadian merchants are giving extra on the US exchange rate to attract visitors from here, so it won't be quite as dear as it could be.

In any case, the lower US dollar will help retail sales in Michigan and other border states. Michigan's economy could use the help.

I have always felt that Canada is our closest ally politically and economically, as well as geographically. I welcome our friends from the Great White North!
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