Question:

Why is Canadian Dollar's value constant during the past couple of months given the skyrocketing energy prices?

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I remember in Dec. 07, when a little nudge in the energy prices caused the Cdn dollar to shoot up high. But now, even though the energy prices have gone much higher, the Cdn dollar seems to be at the same level. Any reason?

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2 ANSWERS


  1. It could be that, unlike the US, Canada is not just printing money as fast as the presses will run, with nothing to back its value. Maybe their politicians are just slightly less corrupt than ours, and are able to resist prostituting themselves to the highest bidder.


  2. The exchange rates of currencies depend on which way people are exchanging more.  

    The price of the Canadian dollar would go up if Canada had a big trading surplus with USA.  And a lot more US dollars were being changed into Canadian dollars than the other way around.

    Actually, Canada does have a large trade surplus with USA.   Because Canada sells a lot of oil, gas, and other natural resources to USA.  But these natural resource companies may have decided to invest their US dollar profits in USA, instead of bringing the money to Canada and changing it into Canadian dollars.  And this may be the reason why the exchange rate hasn't changed much recently.

    It's also possible that the Canadian central bank has been buying a lot of US dollars in order to keep the exchange rate stable.

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