Canadian dollar reaches parity with
U.S. [http://www.PoliticsWatch.com Updated 6:05 p.m., September
|The Canadian dollar reached parity with the
U.S. dollar for the first time since November 1976 on
OTTAWA — The Canadian dollar attained parity with the U.S. dollar on Thursday morning for the first time since November 25, 1976.
As recently as 2002, the Canadian dollar was at a record low of 62 cents U.S. The Canadian dollar's record high against the U.S. dollar was in 1957 when it closed at $1.06 U.S.
The dollar made its surge past $1.00 U.S. following the U.S. Federal Reserve's half-point cut in interest rates this week. The U.S. dollar also fell to a record low against the Euro.
Some American financial analysts say the Federal Reserve was sacrificing the U.S. dollar in effort to save mortgage bankers who have been negatively impacted by the sub-prime mortgage crisis.
Finance Minister Jim Flaherty told reporters in Ottawa that
he spoke with Bank of Canada Governor David Dodge on Thursday
as the dollar soared.
Flaherty said "the real story" was the dramatic decline of
the U.S. currency in recent days. He described the problems in the U.S. housing market
as "a significant concern."
However, the finance minister was more optimistic about the state of
the Canadian economy, even though some economists were warning
Thursday that the high dollar could result in thousands of lost
manufacturing jobs for Canada.
Flaherty downplayed those concerns and noted that "remarkably
resilient" Canadian manufacturers have been able to deal with a
rising Canadian currency for the past four years.
He also said that Canada's economy is so strong that it can
withstand job losses in the manufacturing sector.
"We have the best employment in 33 years in Canada," the
finance minister said. "People who are losing jobs are getting
other good other jobs in Canada -- thank goodness -- because of the strength of our
The finance critics for the Liberals and the NDP, however, both told
PoliticsWatch they were concerned about the high dollar's impact on
the manufacturing sector.
Liberal finance critic, John McCallum, called the soaring dollar and its impact on the manufacturing sector the "first real economic challenge" for the minority Conservative government.
"If your main concern is jobs then it's a bad thing," McCallum told PoliticsWatch.
McCallum accused the government of making the situation worse by
ignoring the manufacturing sector.
"The government is doing nothing about manufacturing. They haven't put a penny into the auto sector."
In an interview with PoliticsWatch.com, NDP finance critic Judy Wasylycia-Leis said the rising Canadian dollar is bad news for Canada's economy and is having "a
devastating impact on our manufacturing sector," which sells goods to the U.S. market.
"It begs for some action on the part of our finance minister," she said. She urged Flaherty to send signals the Bank of Canada to alter its monetary policy and lower interest rates.
The Bank of Canada declined to comment on the rising dollar Thursday.
"We never comment on specific movements in the dollar." said Bank of Canada spokesperson
Speaking at a press conference at the White House, U.S. President George W. Bush pushed aside concerns about the health of the U.S.
economy which is largely behind the decline in the U.S.
"I say that the fundamentals of our nation's economy are
strong," Bush said. "Inflation is down, job markets are steady and strong ... corporate profits appear to be strong, exports are up."
While many analysts are suggesting high commodity prices and Canada's strong economy are behind the rise in the Canadian dollar,
Ned W. Schmidt, publisher of The Value View Gold Report, told PoliticsWatch
most of the rise in value "is due to speculative hedge funds flows."
"The move in the Canadian dollar recently is largely a consequence of massive speculative flows from these funds. That makes the move very suspect," he said.
"The vulnerability of the Canadian economy to the problems in the U.S. economy are obviously being ignored," Schmidt
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