Canadian dollar at par with US dollar soon?

[Darth Wong]

Have any of you been watching the remarkable free-fall of the US dollar on the international currency exchange markets? Some are saying that for the first time since the 1960s, the Canadian dollar might actually hit parity with the US dollar soon. Is the free-fall of the US dollar even a major news item in your country?

[Enforcer Talen]

First time I heard about it was here. I knew it was hurting vs the Euro, but didnt know it was hurting with everyone else.

[Surlethe]

Nope, it's not a major news item. I can't recall reading it in the newspaper or hearing it on the radio once since the fall started, but it was very noticeable when I went to Europe a few weeks ago. So far, when it's come up in conversation, people have mentioned that the government is letting it fall to strengthen exports and cut the trade deficit, but I'm not sure if that's actually true since I don't know enough economics.

[Alferd Packer]

Well, inasmuch as the price of goods hasn't noticeably gone up yet, I would say it's not major news. Dominating local news is the endless yammering about high gas prices, and what you can do to save at the pump(oddly enough, they never mention "sell the SUV" or "drive less"). When it starts affecting people in a noticeable way, then they'll be endless yammering about it, I'd guess.

[Ace Pace]

Pretty gigantic item here, with the dollar losing 15% of it's value in what seems like practically overnight. Probable primary affect is finnaly unpegging all trade here from the dollar, rather then just parts.

[Ma Deuce]

If that happens it will certainly decimate Canada's manufacturing sector. I've been hearing in the news that something like 250,000 manufacturing jobs will be lost if parity is reached, added to the 250,000 already lost since it rose from around $.70/USD where it was a few years ago.

[Glocksman]

If exports are the reason, the rapid fall does raise a couple of questions.

One, would the expected gain in exports be enough to offset the resulting increased costs in imported energy?
Two, even though the dollar is and has been dropping for a while, imports from China seem to be cheaper than ever on the retail level.
Is China performing financial voodoo in order to keep export levels to the US up?
Three, is there a real risk of the fall becoming a free fall?

[Ma Deuce]

Is China performing financial voodoo in order to keep export levels to the US up?

The value of the Yuan has been for many years directly pegged to that of the US dollar. A few years ago China did up the Yuan's value and allowed limited trading of it's currency, but AFAIK the value of the Yuan is still very closely related to that of the USD.

[Darth Fanboy]

Not a news item as compared to the Canadian dollar, although it should be because the Canadian Money jokes no longer apply and people who tell them just look fucking stupid now.

[J]

Yes, we've been watching it, and it's eating away at the profits we're making from oil & gasoline futures trading which is all done in US dollars. No wonder OPEC countries are upset, they're losing countless billions of dollars thanks to the plunging value of the greenback.

[acesand8s]

A US-based poster here. The company my dad works for has been helped by it. They sell quality control equipment and their international sales have really picked up recently, most likely because of the falling dollar. It's a nice little boost for them, but they're primarily focused on producing for the US market. I've also had friends who invested in some Euro-denominated mutual funds a couple years back and have done very well, getting a double boost from the returns of the stock market and the falling dollar. I could have scraped together some extra cash to invest by maxing out student loans, but that was a little too risky for me.

The value of the Yuan has been for many years directly pegged to that of the US dollar. A few years ago China did up the Yuan's value and allowed limited trading of it's currency, but AFAIK the value of the Yuan is still very closely related to that of the USD.

Yes, China and a few other Asian countries have been doing their best to keep the value of the dollar high relative to their currencies (China is by far the biggest factor in this push, but even small countries like Brunei are getting into it). As long as the dollar's value stays high, Chinese exports will do well in the US, which means Chinese workers are still employed in Chinese factories.

Not only are the Chinese starting to allow some limited currency trading, they're now testing the waters on investing the vast dollar reserves they've accumulated. The Chinese central bank is sitting on $1.3 trillion at the moment and are starting to realize that they can make better than the 4.5% or so they get on T-bills. They recently invested $3 billion in a US buyout manager (Blackstone) and are now establishing an official government investment company.

[K. A. Pital]

Yes, it is.

Russia also likes to tell some news about new oil stock trades opened in Euro and Roubles now/in the future with a menacing context.

I guess everyone understands that something is not that OK with the buck.

[Macunaima]

It is major news around here nowadays this current trend, and how much the Real is strong in contrast to US Dollar; the Brazilian Central Bank had even to intervene in the markets to avoid some abrupt fall during a single day. As for the averages, some years ago, the ratio was 3.5 reais to 1 dollar, and now it has just break the 2.0 mark, rating at 1.95 reais to 1 dollar, more or less. It is the lowest point since 2000, if I'm not mistaken.

[Mr. T]

If that happens it will certainly decimate Canada's manufacturing sector. I've been hearing in the news that something like 250,000 manufacturing jobs will be lost if parity is reached, added to the 250,000 already lost since it rose from around $.70/USD where it was a few years ago.

Their will, of course, be other factors at play that will keep Canada's manufacturing sector competitive though. Some firms (notably auto-makers) are picking Canada as opposed to the Southern U.S manufacturing areas as a result of generally a higher level of education here, and most importantly of all, the fact that our universal healthcare means that they don't need to provide health insurance for their employees (a major burden on businesses locating in the U.S).

[SCRawl]

My old boss, who owns a small manufacturing business in Mississauga, will probably be blowing his brains out if the dollar stays where it is for very much longer. Unfortunately, the Loonie appears to be going up, not down, with the talk of the Bank of Canada rate going up. Not much I can do about it, I suppose.

[Flagg]

Have any of you been watching the remarkable free-fall of the US dollar on the international currency exchange markets? Some are saying that for the first time since the 1960s, the Canadian dollar might actually hit parity with the US dollar soon. Is the free-fall of the US dollar even a major news item in your country?

Of course it's not. Americans can only sustain one or 2 major negative storys at a time, and right now it's Iraq and gas prices. Now if Israel decides to pull another Lebenon this summer, we'll only be hearing about that and gas prices. So unless gas get's cheaper, and Mexicans stop coming here, the dollar is sound. IT IS SOUND! And how dare you fucking say anything different you communist Canuk bastard?! Why do you hate America, Freedom, and Jesus?

[Ma Deuce]

Their will, of course, be other factors at play that will keep Canada's manufacturing sector competitive though. Some firms (notably auto-makers) are picking Canada as opposed to the Southern U.S manufacturing areas as a result of generally a higher level of education here,

Assembly line auto workers generally don't need a very high education level though; Indeed, automakers don't seem to have any trouble setting up high-quality assembly plants in Mexico. Furthermore almost all of the auto plants in Canada have been here for many years, and only a single new one is scheduled for construction (a Toyota plant in Woodstock, IIRC). A few automakers are even moving certain operations out of Canada (GM for instance is closing it's Windsor transmission and St. Catherines engine plant, and moving production of the affected products to US locations). It should also be noted that Canada's total trade surplus is now based entirely on our energy and resource exports, with a growing trade deficit on manufactured goods.

[Dartzap]

The weak dollar was mentioned a while ago when the Sterling hit 2 for 1. The main story at the moment is the effects that the Chinese stock market changes might have on the worldwide economy.

[Einhander Sn0m4n]

First I heard about this, and quite frankly I find it horrifying. Seriously, the MSM here really needs a Boot to the Head. Did a celeb die recentlyor something?

[Einhander Sn0m4n]

Have any of you been watching the remarkable free-fall of the US dollar on the international currency exchange markets? Some are saying that for the first time since the 1960s, the Canadian dollar might actually hit parity with the US dollar soon. Is the free-fall of the US dollar even a major news item in your country?

Of course it's not. Americans can only sustain one or 2 major negative storys at a time, and right now it's Iraq and gas prices. Now if Israel decides to pull another Lebenon this summer, we'll only be hearing about that and gas prices. So unless gas get's cheaper, and Mexicans stop coming here, the dollar is sound. IT IS SOUND! And how dare you fucking say anything different you communist Canuk bastard?! Why do you hate America, Freedom, and Jesus?

You do that too well, Flagg.

[muse]

I imagine the flow of cross-border shoppers will soon reverse, then again after accountng for the intelligence of the average US citizen this could take quite some time...

[Admiral Valdemar]

I do believe the Aussie is doing the same, it may be headed for something of a 1:1 ratio too.

Remember, parity isn't always a good thing. Ask Argentina as the millennium dawned whether it was a good idea or not. It practically sunk their economy having their peso on par with the USD.

I've seen many people actually swallow the official CPI figures and even blurt out the T-bill is doing fine with interest rates only around 1%! These people mustn't buy anything, at least not anything related to energy or food, since prices have effectively gone up a couple of orders of magnitude compared to wage increase in the last decade for the US. Just about every currency now is doing better than the USD, excepting, of course, the Zimbabwean one.

It's even more fun as ethanol fucks over the US agri-business side of things, meaning higher food costs globally and the housing bubble continues.

"On the Yahoo News site, we found the following offer:

$510,000 Mortgage…Under $1,698 per month!

Let's see, the average guy earns only $35,000. Take some out for taxes and health insurance…yes, he might be able to swing it, if he doesn't eat."

P.S. Even as the purchasing power of the U.S. dollar collapses, the world currencies with an ipso facto energy "backing" are doing very nicely. Take the Canadian loonie. While many factors sent it to the 30-year high it reached today, being backed by the Alberta fields and oil sands is making it look as good as the gold-backed greenbacks we used to know.

The same goes for the British pound, with England's vast share in the North Sea oil riches…Norway's krone…even Australian dollars, backed by vast stockpiles of coal, gas, and - of course - uranium."

[Spin Echo]

Have any of you been watching the remarkable free-fall of the US dollar on the international currency exchange markets? Some are saying that for the first time since the 1960s, the Canadian dollar might actually hit parity with the US dollar soon. Is the free-fall of the US dollar even a major news item in your country?

The kiwi's have been reporting the NZD reaching record high's versus the USD. It was nearly up to to .75 cents per US dollar, though it's back around 73 cents now The conversion rate normally hangs out somewhere in the low 60 cents. This is good news for me as I'll be making a brief trip to the States this winter (summer? damn these hemispheres). Of course, not so good for the kiwi exporters, who are grumbling that the high dollar is hurting exports.

My partner just spoke to his bank in Norway, and they're recommending we pay off my student debt in the not too distant future while the dollar is low. His bank said they anticipate the dollar will stay low until the next election.

[Uraniun235]

Have any of you been watching the remarkable free-fall of the US dollar on the international currency exchange markets? Some are saying that for the first time since the 1960s, the Canadian dollar might actually hit parity with the US dollar soon. Is the free-fall of the US dollar even a major news item in your country?

Of course it's not. Americans can only sustain one or 2 major negative storys at a time, and right now it's Iraq and gas prices. Now if Israel decides to pull another Lebenon this summer, we'll only be hearing about that and gas prices. So unless gas get's cheaper, and Mexicans stop coming here, the dollar is sound. IT IS SOUND! And how dare you fucking say anything different you communist Canuk bastard?! Why do you hate America, Freedom, and Jesus?

Probably an inability of news editors to recognize three things:

1) Why is the dollar in decline?
2) Why should people be concerned that the dollar is in decline?
3) What should be done, and by who, to counteract this?

[Admiral Valdemar]

CNBC has recently started reporting on this as being an issue that is causing concern, but only because people have been phoning and e-mailing in about why the M3 data and CPI the gov't provides doesn't account for why they're paying 40% more this year for milk and bread. Fuel prices are noticeable because the US hasn't the tax that most other nations, namely those in the EU, have to mask such increases, so that gets most of the attention, even if the prices are just about the cheapest in the First World!

There is the issue of a conflict of interest too. If people knew the dollar was crashing and started trying to do something about it, then you'd see how the crash of '29 happened firsthand. No one wants that panic and so investment bankers and economists predict happy times and point to snazzy digital graphs of the Dow and NASDAQ flying through the roof, because a straight line up and a big number in nominal terms means more than your dollar's buying power falling as the circulation amount rises 14% annually (though not quite the 40% Russia is dealing with). I'm sure in Zimbabwe they can say the same thing on the stock market. Too bad billionaire status means you can just about buy a loaf of bread.