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How does the Canadian dollar affect interest rates?
Posted by James on June 6, 2009 in Home Loans | ∞
Amanda L
Now that the Canadian dollar is at parity with the US dollar, I’ve been hearing in the news that the Bank of Canada will be hiking interest rates. What is the reason behind this? How exactly does the dollar affect the interest rate? Thanks!
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Now that the Canadian dollar is at parity with the US dollar, I’ve been hearing in the news that the Bank of Canada will be hiking interest rates. What is the reason behind this? How exactly does the dollar affect the interest rate? Thanks!
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1 Comment
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The dollar does not affect the interest rate.
What the problem is, is the parity dollar, it makes exporting companies less competitive so the Canadian gov’t would really like a lower dollar.
But The Canadian gov’t also sees an overheated economy and is worried about inflation, and they will raise interest rates to stem inflation. Unfortuneatly this will attract more money to Canada and will raise the value of the dollar furthur
Like possible CDA/US 1.10/1 in a few years