Canadian Dollar Fluctuations
The Canadian dollar has declined by over thirty percent versus the United States dollar,since it was at its highest in 1970. The reason for this is mainly the following factors: theQuebec factor, the inflation factor, the productivity factor, the growth in government and taxesfactor, and the commodity price factor. These all come together to bring us to what theCanadian dollar is worth compared to the U.S. dollar today. The Quebec factor is partly responsible for the decline. "It is no coincidence that theCanadian dollar began its descent to 69 cents in November 1976."¹ That was the month in whichthe Parti Quebecois shocked political observers by winning the Quebec provincial election. Itwas the first, and still only, party explicitly committed to separation to assume the reins of powerin Quebec City. "While it is generally agreed that there is a risk premium built into the Canadiandollar because of the threat of separation, no one believes that threat is responsible for thewhole, or even the bulk, of the currency's decline."² The Canadian dollar is much lower because of separation because of what happenedduring the 1980 Quebec referendum. At the beginning of the campaign, in March 1980
So they sell their Canadian dollar assets or do not buy them at all. rate of late, this has not beenthe case over the last twenty five years. manufacturing productivity grew by seventy one percent. In conclusion, the Canadian dollar has declined by over thirty percent versus the UnitedStates dollar, since 1970 mainly because of inflation and the fact that government taxes havegone up. Inflation means that the same amount of money purchases fewer goods and services thanbefore. Then a country's costs of production become higher and itsexports cannot be sold at competitive prices. By the end of the summer, he is mowing the lawn in an hour. dollar, since we would share the samecurrency. But in May, when the No side won a resounding 60-40 per cent victory overthe separatists, the Canadian dollar leaped back up. Obviously, this meanscurrency A is going to be less valuable than before. "Just as the European Union has opted for one currency, the Euro, so thesignatories to NAFTA (the North American Free Trade Agreement) - namely, Mexico, Canada,and the United States - should adopt one currency for the continent.
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