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NBC Daily Forex: Canada Wants No Part in Currency War

ByThe National Bank of Canada
Published 02/14/2013, 05:46 AM
Updated 05/14/2017, 06:45 AM

On Tuesday, G7 leaders pledged to avoid the current currency war, stressing that exchange rates should be determined by markets. This attitude smacks of hypocrisy, given that Japan has openly embraced a weak yen policy, and that the United States is doing everything in its power to drive down the USD through its quantitative easing programs. Meanwhile, in France, President Hollande would like to rein in the strong euro. Needless to say, China is also a major culprit, manipulating its currency to favour its exports.

Canada's response as delivered by BoC Governor Carney: The country would not emerge as a winner in a currency war. In other words, Canada wants no part in this war and will let the loonie gain ground against other currencies. Carney repeated the Bank of Canada's position in recent months, namely that Canadian manufacturers should take the opportunity provided by the high dollar to purchase cheaper machinery south of the border. In the meantime, the country's trade balance is deteriorating (see next Monday's Snapshot), which will have an adverse impact on GDP…

Early this morning, the pound sterling went down due to sharply negative comments from the Bank of England.

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