Canadas depreciating dollar
The Depreciation of the Canadian Dollar Canada has been increasing its prestige as a high-tech, industrial, society since the end of World War II. In many ways it resembles very closely its southern North American cousin, the United States. Some of those similarities are residing in its market-orientated system, pattern of production, and its high standard of living. Most years following the war up to the present, Canada has experienced some kind of continued growth as a prosperous and developed country. However, during the year of 1998, Canada experienced an unexpected large depreciation in their dollar relative to the United States. Late in August of that year, in fact, the value reached an all-time low. During this paper, I will try to present some of the possible economic factors that may or may not have led to this change in Canada's exchange rate. I will also examine some additional analysis and theories as to why the trend possibly occurred. As the year 1998 approached, the trend for the Canadian dollar was on a steady decrease in value in relation to the U.S. dollar. With each passing year the dollar lost some value as the
This is to be expected as a depreciated currency would effect the value of the products, however as pointed out before, nothing in growth rate eluded to the depreciation that took place in 1998. Inflation Rate Similar to the growth rate, the inflation rate also had nothing to offer in terms of an indication of the lowering exchange rate. 70*Data extrapolated from CANISM, Statistics Canada's online statistical database But as Appendix 1 indicates, 1997 was the beginning of the gradual decent of the Canadian dollar, until it reached it's low in August of 1998. 1997 spelled a big decrease in the trade balance and the numbers from 1998 show much of the same. Other Factors Besides these basic economic indicators two other main factors influenced the depreciation of the Canadian dollar.
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