Weak dollar raises import prices, force Canadians to shell out more for food

By FXStreet FXStreet (Mumbai) – Bank of Canada Governor Stephen Poloz in his speech at Ottawa today asked Canadians to get used to a cheap dollar. The Canadian Dollar is also considered to be a ‘Commodity Currency’ given the fact that Canada is extremely resource rich and a sizable portion of the country’s income comes from mining and exporting resources, particularly oil. Thus, with oil hovering around $30 per barrel threshold it is not surprising to see the loonie facing downward pressure. Gasoline prices declined 10.6 per cent in November from a year earlier, less than the October rate of 17.1 per cent.

“It is not a coincidence that the Canadian dollar is about where it was back in 2003 and 2004,” Poloz said, “oil prices are also about where they were back then.” He noted that falling commodity prices were draining $50-billion (Canadian) and reiterated that the weak Canadian dollar was the result of the extremely low commodity prices. Lower currency value, it seems will be a norm for some time as it continues to stomach the impact of falling commodity prices.

The lower Canadian dollar has helped to keep Canadian goods and services competitive and the foreign demand stable. This in …read more

Source:: FX Street