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Loonie Indeed A Commodity Currency

ByThe National Bank of Canada
Published 04/18/2012, 09:20 AM
Updated 05/14/2017, 06:45 AM
FTNMX451030
-2.24%

On the exchange markets, the loonie is considered a commodity currency, as the aussie and the kiwi. Today’s Hot Chart shows that market perception about the loonie is founded. In the first two months of 2012, commodities represented 64% of the value of Canadian exports of goods.

Of course, the term “commodity” as used here is not limited to raw materials. Of the 64% of total exports, inedible raw materials represented 29.2%, food, live animals and tobacco 7.2%, while inedible fabricated materials accounted for 27.6%. The latter category includes manufactured goods such as forest products, primary metals, gasoline and tires. Indeed, the term “commodity” here encompasses all goods that are not classified as finished products (that is, machinery and equipment, automotive products and other consumer goods).

The importance of commodities in Canadian exports of goods has increased to a level unseen since 1981, from a 1999 trough caused by successful penetration of Canadian automotive products into the U.S. market. Of course, a good portion of the increase is due to relative price appreciation. But the chart shows that even when price changes are factored out, commodities have increased their share of exports from 45% in 2007 to 48.7% at the beginning of 2012. Therefore, even in volume terms, commodities account for almost half of Canadian exports of goods.
Loonie indeed a commodity currency

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