CURRENCY'S STRENGTH WILL DEPEND ON U.S. RECOVERY, MARTIN SAYS Alan Toulin The Canadian dollar closed at $62.94US a record low. The Minister of Finance, Paul Martin stated that, "The currency's strength will depend on U.S. recovery" and that the recovery in the United States will boost the economy and our currency. The $62.94US close breaks the last record of a close of $63.09US which was set on August 28, 1998 due to a financial crisis in Asia. However, Paul Martin stated that the economy is basically sound and that the Canadian economy is stronger then most other countries.
Paul Martin stated that he is mostly concerned with the economic recovery in the United States because it is that that will have an impact on our currency. The Canadian dollar closed at a record low and it now takes about $1.59 to buy an American dollar, not including foreign exchange charges.
Many investors fear the economic insecurity which caused investors to escape the loonie due to weak prices in gas, mineral oils and Canada's lumber. Chief economist at CIBC World Markets, Jeff Rubin, said he expects the loonie to reach about $0.61 by the end of the year. A TD Bank economist said that Canada's economy will most likely get worse as rate profits fall and more layoffs are introduced.
However, an economist at Informetrica Ltd. Said that the weak currency is not such a bad thing. The low dollar assists import and export competing firms and discourages consumers from buying foreign products or taking vacations overseas. A reoccurring debate is likely to occur due to the low Canadian dollar which would implement the possibility of a common North American currency, which has been rejected before, but some feel that this method would stabilize the Canadian currency.
Unemployment results may cause...