The "rising" Canadian dollar

[wlach]

A great deal of hay has been made recently about the "rising" Canadian dollar. I really think this is the wrong way of looking at things. It would be more appropriate to say that the U.S. dollar is sinking. Hard. Why is this? I think the basic pattern is pretty simple to understand

Comments

[cpirate]

All this is true, and the source of much of the "ZOMG the Loonie is at par" hysteria, but it's also the case that right now the Canadian dollar is quite strong against e.g. the Pound and the Euro. So when people say the dollar is rising, they're usually right. Of course, generally nobody goes into whether a given rise in the Canadian dollar is due to strength in the Canadian currency or weakness in the American one, but there's only so much you can hope for out of mainstream news.

[wlach]

I probably should have mentioned that, although not doing so gave you the opportunity to comment. :)

Force of habit

[anonymous]

The two economies are tied together so strongly (and Canada's is so much smaller) that people aren't in the habit of considering the value of U.S. and Canadian dollars in other money markets to get a more accurate picture. They might as well since making the distinction is fairly useless

Re: Force of habit

[wlach]

It's not quite correct to saying that the U.S. is paying for the development of the Asian world, since they're not offering much of substance in return for what they're getting (that's where the large trade deficit figure comes in). I'm afraid that this situation can't last forever: the fall of its currency is just one of the signs that this is so.