The government will not intervene in the Canadian dollar's continued increase in value compared to the United States dollar, but will instead focus on making businesses more competitive so they can better adjust to a stronger currency, Prime Minister Stephen Harper said April 7.The aforementioned Conference Board report is available here. Now, students, please compare and contrast how Canadian politicians have addressed the effects of US dollar devaluation with how American politicians have handled the pegged Chinese RMB. Please allow me to satirically paraphrase:
The dollar's value against other currencies is not the government's primary concern, but rather the level of competitiveness of Canadian industry, Harper told reporters at a news conference in Toronto with Ontario Premier Dalton McGuinty. “This is outside the purview of the government of Canada, outside the responsibilities of the prime minister,” he said.
The government is aware of concerns over the dollar's value, but the Bank of Canada is solely responsible for monitoring the value of the currency as part of its process of setting its trendsetting interest rate, he said. “It is the Bank of Canada that independently guides Canadian monetary policy,” he said.
The Canadian dollar (loonie) had moved above parity with the U.S. dollar for parts of April 6 and 7, although it returned to slightly below parity by the close of trading on each of those days....
Meanwhile, the Conference Board of Canada stressed April 8 that the best options for the Canadian economy to respond to a dollar at or near parity with its U.S. counterpart is to boost business productivity growth and expand the internationalization of individual firms.
Canada's solid banking system, strong domestic economy, relatively healthy fiscal situation, and wealth of raw materials will support a dollar at par with the U.S. dollar, Conference Board chief economist Glen Hodgson said in a statement accompanying a report entitled “Learning to Live With a Strong Canadian Dollar: Four Options for Business and Governments.”
“For firms that are willing and able to adapt, a strong dollar may be just the challenge that unlocks new economic potential through enhanced innovation, faster productivity growth, and expanded internationalization,” he said.
Improvements to productivity growth, both of individual firms and the overall Canadian economy, should focus on promoting stronger investment in physical and human capital, reducing regulatory barriers, and re-energizing free trade and investment within North America and globally, he said. Firms should also use multiple approaches to improve their participation in the global economy, as firms and industries that have more ways of hedging their operations are better positioned to reduce the financial risks associated with currency fluctuations, he said.
- Canadians: Hey, the Americans' currency policy is their business; and monitoring of nations' currency policies is a central bank issue, not a trade issue; and the cheaper dollar can benefit many of our producers, so we plan to adapt and take full advantage. (Now, who's up for some hockey, eh?)
- Americans: No fair! You're cheating! We demand you stop or else! Wahhhhhhhhhhhh! (I'm Chuck Schumer/Arlen Specter/Lindsay Graham, and I approve this message.)