56 | CANADIAN DOLLAR WORDS | Smart Currency
Canada, unlike its neighbour to the south, came out of the global fi nancial crisis minimally damaged. Many economical factors stack up in the country’s favour. As a result its currency, the Canadian dollar, has seen growth while others have faltered. Smart Currency’s Jana Korpova gives us an overview of the CAD
Canadian standards O
ne of my abiding memories of Canada will be having breakfast on the balcony of
a hotel in Vancouver and watching the seaplanes landing as they brought
people to work. Such a contrast to the tube system, otherwise known as the moving sauna, of the London commute. I also noted how the Canadians were very clever in identifying the Hong
Kong Chinese as economic immigrants worth encouraging to come and live in Canada. So prior to the hand back of Hong Kong to China in 1999, there was a huge fl ow of Chinese into Canada
USD CAD Yearly Exchange Rate
1.8 1.6
1.4
1.2 1
0.8 0.6
0.4
0.2 0
and they have become a mainstay of a highly effi cient workforce in so many business areas. But why was I in Vancouver? Mining
was the answer and Canada has a twin involvement in mining. Firstly, it is the premier place in the world to raise fi nance for mining ventures, especially for the early stages. Secondly, if it doesn’t have the world’s largest supply of mineral resources, it is very close to doing so, and with these resources it has enjoyed the boom years of the mining industry. And what else does it have in its
favour? A banking system that wasn’t “crippled” by the fi nancial crisis. The Canadian banking supervisors understood that it was fundamentally wrong to allow the Canadian banks to leverage their balance sheets with riskier business. The banks had to keep to their core business, which was plain vanilla banking services. Compare that approach to what happened across the
“What else does Canada have in its favour? A banking system that wasn’t crippled”
USD CAD Exchange Rate December 2012 1 0.998
0.996 0.994 0.992 0.99 0.998 0.996
0.994 0.982 0.98 0.978
border in the US and here in the UK, where super profi ts were sought using the banks balance sheets to invest in high risk assets. And we all know where that ended up with banks and fi nancial institutions having to be bailed out either side of the Atlantic. So as you can imagine we have
seen signifi cant strengthening of the Canadian dollar against both the US dollar and sterling. The CAD was ranked 7th in the
world for most traded currencies by value in 2010, accounting for 5.3% of global daily shares – a clear indication of the currency’s importance in international trade. But this is not the only reason the Canadian dollar prospers – it is known worldwide as a ‘reserve currency.’ Various central and commercial banks have kept the Canadian dollar as such since the 1970s, particularly in Central and South America. In Latin America, however, it is held owing to each nation’s national issues of remittances
FX
www.opp-connect.com | FEBRUARY 2013
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