Breaking NewsTreasuryandRisk.com will be offline for scheduled maintenance Saturday May 8 3 AM US EST to 12 PM EST. We apologize for the inconvenience.

Search
 
Best Practices

Covering the USD–CAD Spread

Will Canadian expansion make companies loony for the loonie?

X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Things are looking upbeat for Canada’s economy after a few years of difficulty. That is good news for the nation overall, but the trend may eliminate the trade advantage Canada has enjoyed due to its weak currency.

With the new budget that was unveiled last week, Canada is fresh off its third consecutive year of trade surpluses. One major reason for the nation’s favorable trade balance is the low value of the Canadian dollar relative to other currencies. The U.S. dollar and Canadian dollar were nearly at parity in 2012, but when global commodities markets took a nosedive, major producers like Canada were hit hard. As demand slowed for the energy-heavy exports that Canada provides the rest of the world, the value of the Canadian dollar, or “loonie,” also slipped.

The Canadian economy has turned around since then. Commodity prices have rebounded, restoring Canada’s ailing trade balance, and Prime Minister Justin Trudeau has promised policies that would help continue this growth. Soaring markets in the United States—one of Canada’s primary trading partners—have also helped. The Federal Reserve’s March interest rate increase of 25 basis points indicates that the Fed expects further growth in the U.S. economy in the near future. And as the U.S. goes, so goes Canada, generally.

Complete your profile to continue reading and get FREE access to Treasury & Risk, part of your ALM digital membership.

Your access to unlimited Treasury & Risk content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical Treasury & Risk information including in-depth analysis of treasury and finance best practices, case studies with corporate innovators, informative newsletters, educational webcasts and videos, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM websites including PropertyCasualty360.com and Law.com.

Already have an account?

Recommended Stories

Transfer Pricing Considerations in Light of Covid-19

Susan Fickling-Munge & Zachary Held |

Whether or not they’ve taken drastic steps such as restructuring, U.S. businesses are facing a changing environment that requires them to revisit transfer pricing policies.

Robust Rebound for the U.S.

Aaron Rutstein |

The speed and consistency of the economic recovery will depend on political stability and continued vaccination progress.

Treasury & Risk

Join Treasury & Risk

Don’t miss crucial treasury and finance news along with in-depth analysis and insights you need to make informed treasury decisions. Join Treasury & Risk now!

  • Free unlimited access to Treasury & Risk including case studies with corporate innovators, informative newsletters, educational webcasts, and resources from industry leaders.
  • Exclusive discounts on ALM and Treasury & Risk events.
  • Access to other award-winning ALM publications including PropertyCasualty360.com and Law.com.

Already have an account? Sign In Now
Join Treasury & Risk

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.