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Strategies & Market Trends : Canadian Dollar
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To: Ed Huang who wrote (56)12/27/1997 2:01:00 PM
From: TAPDOG  Read Replies (1) of 103
 
Ed, There was nothing new or Earthshaking in the WSJ article, basically the points you make about the strong economy, low inflation, and low deficit. Also they talked about how the free trade agreement has helped Canadian businesses.
The only thing I would add to your analysis is that strong economy does not always mean strong currency. I think that Asians (especially Hong Kong) parked a lot of money in Canada. As they need the money they will repatriate their capital because they need the money, regardless of how well the Canadian economy is doing. Remember, the point isn't to understand the Canadian economy, but to figure out how to make money off it.
Also, I don't think the Bank of Canada is worried about a weak currency so long as the Can$ declines slowly and orderly, which it has pretty much done. 68 cents wouldn't be so bad if it takes another 6 months to get there. 68 cents next week might make them nervous because it would make Canada look like a potential Thailand.
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