Sign Up for FREE Daily Energy News
  • Stay Connected
  • linkedin
  • twitter
  • facebook
  • instagram
  • youtube2
Hazloc Heaters
WEC - Western Engineered Containment
Copper Tip Energy Services
WEC - Western Engineered Containment
Copper Tip Energy
Hazloc Heaters

Macklem Says Further Loonie Gains Could Be Economic Headwind

(Bloomberg) The Bank of Canada is closely monitoring recent gains in the nation’s currency, to ensure the appreciation doesn’t create headwinds for the nation’s economic outlook, according to the central bank’s head.

At a press conference Thursday, Governor Tiff Macklem said the recent appreciation reflects in part higher commodity prices, which are good for the nation’s economy. Still, a continuation of the gains could begin to pose a risk to the central bank’s most recent forecasts released last month, which assumed an exchange rate of $0.8 per Canadian dollar.

The Canadian dollar is up 4.9% so far this year, the best performing major currency. It weakened after Macklem’s comments, falling to C$1.2179 per U.S. dollar, or $0.8211 per Canadian dollar at 1:12 p.m. in Toronto trading.

“If it moves a lot further that could have a material impact on our outlook and it’s something we’d have to take into account in our setting of monetary policy,” Macklem said Wednesday. “If the dollar were to continue to move — particularly if its not reflecting good developments for Canada — that could become more of a headwind on our export projection.”

Techmation Electric & Controls Ltd.
Techmation Electric & Controls Ltd.

The Canadian dollar has been tracking resource prices higher this year. The Bank of Canada commodity price index — a gauge that tracks movements of commodities produced in the country — has hit the highest since 2014 after gaining 30% so far this year. Excluding energy, the index is at an all-time high.

But the currency also appears to have gotten a lift from Macklem’s messaging, after the Bank of Canada last month accelerated the timetable for a possible interest-rate increase and pared back its bond purchases.

“Macklem only said that if the currency were to appreciate absent fundamental reasons, then they’d be more concerned about competitiveness implications but that so far that’s not the case,” Derek Holt, an economist at Bank of Nova Scotia, said by email.

Share This:

More News Articles

New SHOWCASE Directory Companies


Axis Communciations
Delta Remediation Inc.
The Coverall Shop
Muddy Boots
Smart-Project Management Inc. / Trusted Pipeline Advisor
Vista Projects Limited
Payload Technologies Inc.