14 April 2011

Economists say strong Canadian dollar is here to stay

A Bank of Montreal economist, Douglas Porter, says we’ll see a strong
loonie tendency for some time. In his opinion, the Canadians should
even get used to it, because their currency will, probably, stay above
par through 2012 or even longer.
Porter also noted that such trend will have both positive and negative consequences for the Canadian economy.
On the one hand, a strong loonie can decrease the inflation level, because the prices will fall.

Moreover, it may keep the interest rates low even when the Bank of Canada starts raising them.
But in the same time there’s a certain price gap: a lot of goods in Canada are 20% more expensive than in the U.S.
The BMO economist believes a strong dollar will help Canadian businesses buy more imported machinery and equipment. But it doesn’t guarantee a sharp industrial productivity increase.

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