So, how about that greenback?

[Kidlicious]

Originally posted by Flubber
On the personal side, I sympathyze with your losses but at the same time it will make a trip south of the border very much cheaper for me

Ah yes, everyone come to America and take advantage of our weak currency. We used to be the ones taking advantage of weak currency. Oh well, I'm not planning to purchase any other currency any time soon. I just hope our import prices don't go up too much.

[Flubber]

Originally posted by Kidicious


Ah yes, everyone come to America and take advantage of our weak currency. We used to be the ones taking advantage of weak currency. Oh well, I'm not planning to purchase any other currency any time soon. I just hope our import prices don't go up too much.

Coming to America and spending our money there is called " stimulating your economy" not "taking advantage".

Should I do the DL dance for this Kidicious name. Zero on-topic posts and many many posts in a short period in the OT

[Bosh]

The what? You mean the yuan?

No, the Korean Won. i.e. what I'm going to be paid in.
*prays for plummeting dollar*

[Spiffor]

Originally posted by Oerdin
I'm still thinking a currency union would be a good idea for NAFTA. Though I dread ever having to use an "AMERO".

You may be smarter than the Europeans and find a better name for your currency. "Euro" is an ugly name no matter how you look at it. "Ameriguo" looks already cooler than "Amero"

[Starchild]

pfff. Just call it the North American Dollar. That way Americans can still say dollars, Canadians can still say dollars, the rest of the world can still say dollars and a bunch of currency traders can giggle over speculating on Dong and NADs

[Dinner]

The US and Canada would no doubt love to keep the name dollar though Mexico has something of an inferiority complex so I'm sure their nationalists and leftists will scream endlessly about the name "dollar" being a form of Norte Americano Imperialism.

[Dauphin]

Call them Naftas.

[Starchild]

Who said Mexico had to be included? A currency union in North America would work best between Canada and the USA. Mexico comes later.

[Kidlicious]

What are the benefits of currency union? I mean all other countries have to do is tie their currency to the US dollar. Then if they want they can change it later. If Canada and Mexico formed a currency union with the US they would lose control over their own monetary policy.

[JimmyCracksCorn]

Originally posted by Kidicious
What are the benefits of currency union? I mean all other countries have to do is tie their currency to the US dollar. Then if they want they can change it later. If Canada and Mexico formed a currency union with the US they would lose control over their own monetary policy.

Well, it could mean a shared central bank and joint rates, etc... but that would mean the two contries would have to concede certain powers, which might not be a good idea, depending on how you look at it. I don't know what to think really.

But I think it might just be better to permanently peg the CAD to around US1.50 or so. I know it might seem selfish due to my situation, but a low loonie benefits Canada by encouraging exports, and US investors get more bang for their buck and Americans get cheaper products. Even PM Chretien has publicly supported a low dollar as being good for the economy.

[JimmyCracksCorn]

Inflation, dollar dive - rates next?
Central bank's 'fears quashed in one fell swoop': Currency has biggest drop since '76 as prices grow stabler, suggesting economy is slowing

Jacqueline Thorpe
National Post, with files from news services

Friday, May 23, 2003

The Canadian dollar plunged US1.33¢ yesterday, its steepest drop in more than 25 years, after lower inflation figures led investors to bet the Bank of Canada would not raise interest rates and could even cut them.

The dollar closed trading at US72.79¢, an abrupt drop that ended months of growth against the American dollar. Until yesterday's decline, the loonie had appreciated by 16.4% since the beginning of the year.

The drop, the largest since 1976, followed a surprising report from Statistics Canada showing the inflation rate fell to 3.0% in April from 4.3% in March. Economists had predicted the rate would come in at 3.6%.

The Bank of Canada's core inflation measure, which excludes eight volatile items such as gasoline and fruit, dropped to 2.1% from 2.9%.

The central bank's inflation target is 2%.

"It's got people talking about rate cuts instead of rate hikes from the Bank of Canada and it's a huge turnaround from where we were just a few days ago," said Steve Butler, director of foreign exchange trading at Scotia Capital.

Adding to the dollar's decline was an admission from the Bank of Canada that the currency had risen faster than the bank had expected.

"The magnitude and speed of the movement of the Canadian dollar have been greater than anyone had anticipated, and we are in the process of assessing the implications of this movement," Paul Jenkins, senior deputy governor of the Bank of Canada, said in a speech to the Economic Club of Toronto.

Last month, the bank raised its rates to 3.25% from 3.0% -- its fifth rate hike in a year -- and said it might have to raise them further to cool an economy operating close to capacity.

But the Statistics Canada report quelled that prospect. "It's as if the Bank of Canada's inflation fears have been quashed in one fell swoop," said Marc Lévesque, senior economist with Toronto-Dominion Bank.

Today the Bank of Canada is facing an entirely different situation.

Higher interest rates -- more than double U.S. rates -- have become a magnet for international investors, who have sent the Canadian dollar on its most rapid appreciation on record.

il yesterday's sharp move down, the dollar had risen US10¢ since the beginning of the year. The move has suddenly made Canadian exports much more expensive on world markets and could curb growth significantly, economists say.

Meanwhile, the U.S. economy has so far failed to bounce back after the Iraq war and is swimming in so much spare industrial capacity that analysts are worried about the opposite of inflation -- deflation, or falling prices. Germany is on the brink of recession and Japan continues to stagnate.

the sluggish U.S. economy does not recover soon, boosting demand for Canadian exports, the central bank might stand pat on rates for some time to come, Mr. Lévesque said.

"I think they might sit out of the rest of the year, depending on what the U.S. economy does."

Add in the possible impact of mad cow disease to the Alberta beef industry and the effect of Toronto's SARS scare on the tourism industry, and analysts say the outlook for the Canadian economy has dimmed.

"A steady course is important but the rapidity of the change of economic circumstances in the last three months is such that a rethink of the general direction in rates is very, very needed right now," said Warren Jestin, chief economist at Bank of Nova Scotia.

He added that if the dollar resumes its upward charge the bank might have to consider cutting rates.

Ted Carmichael, chief Canadian economist at J.P. Morgan in Toronto, expects inflation to fall toward 1.5%-2% by the end of the summer.

"We don't think there will be a rate hike until the middle of 2004 at the earliest and the market will be increasingly look at whether a rate cut is needed," he said. "That will probably depend on whether the Canadian dollar hangs on to the gains it has and goes further."

"If it keeps going, the case for a rate cut is going to build."

Other economists said there needs to be further evidence the economy is slowing before the bank can contemplate cutting rates.

"It's a little premature to start the talk of Bank of Canada easing," said Warren Lovely, economist at CIBC World Markets. "They'll need more than one downside inflation surprise, and hard evidence that the economy is meaningfully backing away from capacity limitations, before switching into easing mode."

Statistics Canada said a 9% drop in gasoline prices from March to April was the main reason for the decline in inflation. Electricity, shelter, transportation and clothing costs were also all down in the month while health services, alcohol and tobacco prices rose.

With the Canadian dollar still riding high compared to the American dollar, some economists say they expect inflation to continue to fall.

"For exporters, the rise in the Canadian dollar over the past two weeks is equivalent to a 15% price cut," said Jayson Myers, an economist with the Canadian Manufacturers and Exporters association.

"In other words, a $1-million U.S. contract today is worth about $150,000 less in Canadian dollars."

The only way manufacturers can compensate for such losses is through significant cost-cutting, he added, driving inflation even further down.

"In fact, there are clear signals of deflation in many sectors of Canadian industry," he added. "The higher Canadian dollar is expected to cool inflation even further as prices of U.S. imports fall and economic growth slows because of cost cutting by Canadian exporters adapting to the higher dollar."

jthorpe@nationalpost.com

© Copyright 2003 National Post

http://www.nationalpost.com/home/story.html?id=7F514F7C-740C-4849-A1C9-4A3A32CA435C

[Seeker]

I Feel the Pain in this thread.

I'm getting less CAD for the Korean Won I get paid in.

And the Yanks around here are getting it even worse, they lose hundreds.

As long as the dollar falls though, the Won goes up a little so that helps.

Dare I hope for $1=700W? I could really clean up at that rate. (2.1 mil Won per month)

DinoDoc: Get off the DONG and start researching asian currencies for us hapless arts majors floundering in seas of Asian economic turmoil!!

[JimmyCracksCorn]

Originally posted by Seeker
I Feel the Pain in this thread.

I'm getting less CAD for the Korean Won I get paid in.

And the Yanks around here are getting it even worse, they lose hundreds.

As long as the dollar falls though, the Won goes up a little so that helps.

Dare I hope for $1=700W? I could really clean up at that rate. (2.1 mil Won per month)

DinoDoc: Get off the DONG and start researching asian currencies for us hapless arts majors floundering in seas of Asian economic turmoil!!

So you live in Canada and get paid in Won? I didn't realize the won was dropping too. I feel your pain.

Maybe with what the article I posted says above, we will see some more $$ soon...