Canada's Exchange Rate

The exchange rate is the price of one currency in terms of another. A fall in the value of the pound is known as a depreciation and affects both the level of aggregate demand and the costs of production for firms in the UK economy. //One way in which a fall in the exchange rate can be beneficial for the UK economy is that it “should

Exchange rates fluctuate in response to a multitude of factors. Upswings and downswings in the exchange rate can have both positive and negative consequential effects. Depreciation drops the value of the dollar and permits owners of foreign currencies to purchase a greater amount of Australian goods. Hence, depreciation makes Australian exports cheaper and accordingly

One needs to have a base level understanding of what defines an exchange rate. According to Investopedia, a foreign exchange rate is “The price of one country's currency expressed in another country's currency. In other words, the rate at which one currency can be exchanged for another.”(Investopedia, 2012) The process by which foreign exchange rates are determined is really not any different than any other

The most obvious national influence on the Canadian dollar is the well being of the Canadian economy. A strong economy makes the country interesting for investors because it provides a strong economic return. This increases the demand for Canadian dollars and raises the exchange rate. Furthermore, a relatively small supply of investment returns decreases the demand for Canadian dollars economy. It is important to note however that economic strength is a relative concept. A prolonged period of economic growth in Canada will result in not increasing the exchange rate relative to the US dollar. This depends on the country experiencing growth, equal or higher

An increase in the exchange rate of the U.S. dollar relative to a trading partner can result from

In 2008 when the global economy took a turn for the worst Canada managed to come out on top. This is thanks to the export of natural resources and commodities. The Canadian government immediately took charge and start making budget cuts in order to have a full recovery by 2015. (D.R., 2011) Canada has a large threat in its path; its dependence on the outside world.

An inflation-control target range is 1% to 3%. The Bank of Canada targets to maintain inflation at 2% which is the midpoint of inflation-control target range. (Inflation, n.d.) In Canada, the inflation rate in December 2015 is 1.6%. It is the highest inflation rate in Canada since November 2004. Based on what we have learnt, inflation is an increase in the overall price level. In December 2015, the price level of imported goods and weak oil price increase due to the consequence of lower loonie. Besides, consumers pay 3.7% more on food as the price of vegetable and fruit become higher. They also pay more on shelter cost such as home, mortgage insurance and electricity. (Golubova, A., 2016) The higher the inflation rate, the lower the currency.

Changes in exchange rates are the result of changes in demand and supply factors for goods and services, such as changes in tastes, relative incomes, and relative prices. Under a flexible-rate policy, all domestic prices are linked with foreign prices. Any change in the exchange rate automatically alters the prices of all foreign goods to domestic goods. The price change alters the relative attractiveness of imports and exports and maintains equilibrium in each trading partner's balance of

The strength of the U.S. economy is important for Canada’s trade, economy and exchange rate. Increasing U.S. unemployment can positively or negatively influence the value of the loonie. Canada’s dollar can increase due to demand from buyers looking to invest in a stable economy with low risk. On the other hand, Canada’s GDP is dependent on U.S. trade. If less Americans are purchasing goods in Canada due to increased unemployment, the Canadian dollar will fall. Therefore, it is inconclusive that unemployment rates solely influence the rise of the Canadian dollar. There are many other factors that influence the exchange rate, such as commodity prices, investor confidence, overvalued currency and inflation rates.

Exchange rates have affected businesses as it cannot be controlled by companies, however, it can impact them in negative ways. Lululemon having stores not only in the US but around the world, and because of this, it can impact their net revenue, expenses, Liabilities, and assets. Lululemon hold a big percentage of their net revenue in Canada, this has negatively impacted them as in 2016 a change in the Canadian dollar compared to the US dollar was very low in January 2016 (see figure 2) closing at the lowest of 0.68587. This fall is significant as the last time it was this low as 13 years ago in April 2013 (13 year low: Canada’s dollar falls below 69 cents US, 2016). Lululemon in 2016 reported a US $20.3 million revaluation loss due to the foreign exchange and a net foreign exchange loss of $8.3 million (Lululemon, 2016 Annual Report, 2016, p. 22). Lululemon have commented saying they have never hedged foreign currency fluctuations, however in the future, they may enter into derivative financial instruments (Lululemon, 2016 Annual Report, 2016, p. 12). Although there was a price rise, Lululemon had commented that this was due to the new product line being made with more expensive fabric and technology (Schlossberg, 2016).

For that question, I believe that there is nothing to discuss. Whoever decided to come to Canada knew that they would be able to maintain their culture, their beliefs, and they cannot be discriminated for those. However, they have to follow the Canadian law, or they can face the consequences. There is no room for compromise if there is a difference in values. We have to remember that many people, especially women, escaped their countries so they can be safe from practices that are degrading or endangers them. What I like in Canada, is that everyone is under one flag, the Canadian. Everyone can be proud and maintain their own traditions and heritage, but we are Canadians

Summer is approaching and with it is coming a rise in prices. Canadians can expect to pay more for meat, salad ingredients and beer says a TD economist. This is once again in result of falling gasoline prices. The effect of a lower loonie is already making itself felt in the market. Meat was up 12.4 per cent last month, while vegetables rose 8.4 per cent compared to a year earlier. And many economists predict that it will only continue to rise. The drop in the Canadian dollar over the past couple of years is starting to exert a more visible impact on Canadian consumer prices. The dramatic decline in the Canadian dollar over the course of the past two years could increase consumer prices by 0.8 per cent this year. The loonie has sunk 30 per cent since late 2012 as the global price of

Canadian dollar is significantly dropping in price and Canadians are starting to become worried. It is down at 8.7% this year and is trading at $0.86US. It has sunk more than it has in three years and even the loonie has depreciated 1.8 percent to $1.2340 Canadian (CND) per U.S. dollar. The repercussions of this economic downfall are crucial to our economy. As a result of the Canadian dollar sinking, central banks are unexpectedly cutting interest rates, and the crude oil’s collapse will slowly inflate and permeate the economy. Canadian exporters and citizens with U.S. dollar investments gain from our collapse of the dollar. However, it will take a toll on Canadians with higher prices for a wide range of imported consumer products such

First time in the history of 30 years finally in 2007 in September, the Canadian dollar saw its peak against the U.S. dollar at 1.0052, from where it went on to see a hit at US$1.1024 at the time of trading, and again witnessed a high recently after China made an official announcement that it would branch out its approx. 1.44 trillion United States Dollar reserve from the U.S. dollar. However November saw the Canadian dollar come at same level with the value of the U.S. dollar, and in December the dollar had moved back to 0.98 United States Dollar, with reducing rate of interest rates implemented by the Bank of Canada because of their apprehension vis-à-vis its exports to the U.S. Canadian dollar went on to gain fame and Time magazine conferred the recognition of Canadian Newsmaker of the Year for 2007.

Such a process can be very time consuming and imprecise, without, of course, having a market currency price to begin with. The exchange-rate system is an important topic in international economic policy. Policymakers and journalists often seem to treat the choice of exchange-rate system as one of the most important economic policy choices that a national government makes, on a par with free international trade. Under most circumstances and for most countries, a system of freely floating exchange rates is likely to be a better choice than attempting to peg the exchange rate.