Loonie Parity

[ltmurnau]

From CBC News:

***
$1 Cdn = $1 US

Last Updated: Thursday, September 20, 2007 | 11:52 AM ET
CBC News

The Canadian dollar reached parity with the U.S. greenback on Thursday for the first time since November 1976.

The loonie briefly reached $1.0003 US on foreign exchange markets shortly before 11 a.m. ET, the Bank of Canada said. The loonie's stint at parity was brief, however, as it later slipped back to just under $1 US.

[snip]

The dollar's latest rise comes as the U.S. dollar falters against major currencies and commodity prices continue to gain strength.

The U.S. dollar hit a new record low against the euro earlier Thursday, two days after the Federal Reserve made a surprise cut of one-half of a percentage point to a key U.S. interest rate. Economists had been expecting a quarter-point rate cut.

Also giving energy to the loonie's flight has been the rising price of oil. In global commodity trading, the price of a barrel of oil was at $82.10 US, up 17 cents from Wednesday.

With the loonie quickly approaching parity with the U.S. buck, questions are arising about where the Canadian dollar goes once it passes $1 US.

"We've come a long way. It wasn't that long ago that the Canadian dollar was trading around 60 cents and people were thinking the end was near," said Steve Butler, director of foreign exchange at Scotia Capital.

[snip]

"I still think the fundamentals are so strong right now that we will see Canada continue to climb," he added.

***

Let's be clear about this. The Canadian dollar is doing well against the greenback only because the US dollar is doing so poorly against every other major currency, especially the Euro, against which it has lost over a third of its value since Dubya's re-election.

Sherry Cooper, chief economist of BMO Financial group, says that now would be a good time to merge the two currencies - go to the US dollar or create an "Amero." I disagree; why bind ourselves so much more tightly to what may be a sinking ship.

Meanwhile, as an occasional consumer I'm happy to go down south and get cheap Hershey bars, comic books and nylons to trade for favours back up here....

Comments

[cherdt.livejournal.com]

That's incredible. I certainly remember times when the USD was only slightly more valuable than the CD, but never equal. When we used to drive across the Ambassador Bridge to have wings in Windsor, our excuse was always that they were "only 25 cents...Canadian."

I saw something on Snopes.com (Amero Uproar) recently, and the plebes are of course terrified at the very hint of a suggestion of merging currencies. What I enjoyed best, though, is that a coin and medal designer is going to mint sample Amero coins and sell them—I kind of want one, as a historical artifact of something that may never come to pass.

If there is any reason to endorse an Amero, in my opinion it is an ethical one: the U.S. might have a harder time exploiting Mexico if we all used the same currency. (Then again, that might not work. I'm no economist!)

I've been reading way too much about the US Federal Reserve Board and the rate cut and the subprime mortgage loan fiasco lately. I'd better switch gears and study the new O.J. Simpson debacle instead....

[ltmurnau.livejournal.com]

Ha, I remember when the Canadian dollar was over $1.10 American! That was the early to mid 1970s; I was just a kid but I remember going to Watertown NY with my dad to go shopping.

I like the idea of minting imaginary coins. I may do something like this for the next Burn, distributing gewgaws for the Proun Republik, for which I am a cultural attache.

I neglected to mention the mortgage meltdown as a factor - not something that affects the US's international stature, but it sure makes it harder to run a domestic economy when banks are foreclosing right and left. By now everyone should have learned that you can't count on cheap credit - but they haven't.

I don't think a common currency would make it any more difficult, especially ethically, for the United States to exploit Mexico or Canada. There are wackos up here who think full political union with the US is a good idea - why would you guys need ten new Mississippis in the Union, when you already have as full and exploitative access to our resources as you need? (On balance, there are also wackos here who think the Queen should move to Canada and rule the country from a palace on the Ottawa River.)

[bruiseblue.livejournal.com]

I think we should build better ties with the EU - they have their faults, but they have lots of product standards and consumer protections in place (unlike the US, where lots of dangerous things are allowed into milk and spinach) - and we're far more closely aligned with them in terms of social values. Gay people aren't evil, women should be full economic partners, religion is personal, the government should provide a safety net, etc.

Why we persist in loving up the american government, I have no idea.

Though, my grandparents and parents LOVE harper - they loved him when he led the Reform Party too, though. Scary stuff.

[ltmurnau.livejournal.com]

Why do we persist in loving up the US government? Because your grandparents and parents love Stephen Harper, and they have six votes to your one.

[bruiseblue.livejournal.com]

True.
I look fondly back on the (way before I was born) cold war era days, when we stood up to the US regularly, helped them negotiate out of being nuked, and exposed JFK's bringing prostitutes into his Canadian hotel room...

ahh. the good old days. When we had a foreign policy.

Anyway, yeah, my parents and sister were card carrying reform party members. They felt that if only we could get this pesky immigration to go away, Canada could be great again. I roll my eyes at them, and flood them with all the sexist, misogynist, homophobic, pro-corporate quotes, but they dont' listen.

They pay too many taxes. They're worried about their jobs being outsourced to India. SEriously, the 90s blindsided my parents. It was a hit and run. Dad spent 30 years in the military, being sheltered and fed and housed and clothed, and when he emerged, the world was a different (and scary) place where he couldnt' get a job. It was sad to watch.

But now he NEVER says that we have it so good, anymore. So that's one thing - he has some gen x empathy, sometimes.

[bruiseblue.livejournal.com]

Meanwhile, it's going to be months or years before pricing for consumer goods reaches parity - meanwhile, you'll find me shopping on amazon.COM.

grrrrrrr....

Though, I am going to california for a conference in October, and plan to enjoy some shopping, so that's good.

And my US credit cards will be paid off faster.

I remember when it was 60cents or less, and I was being paid in US money. Sure, I had to LIVE in the US, but oh, My student loans were happy.

[alexandra-art.livejournal.com]

The crazy thing to me was Canadian stuff still having such high-numbered prices. I was in Toronto in August and we were quite surprised and annoyed to have a sandwich or lunch plate costing 10-15$$ when the currencies are equal.

Anyhow... ;p