Article Excerpts:
"The Canadian dollar dropped sharply Friday, falling well below 92 cents (U.S.) amid major disappointments on Canadian and U.S. jobs data. The loonie was well off the worst levels of the session but still closed down 0.42 of a cent at 91.73 cents. Earlier, it fell to 91.36 cents, its lowest level since September, 2009. It’s been a brutal week for the loonie, which has fallen about 2.3 cents since last Friday, buffeted by data that showed Canada’s trade deficit grew last fall. Another report showed that the U.S. trade deficit dropped 12.9 per cent in November to its lowest level in four years. Imports, including Canadian crude oil, dropped 1.4 per cent." |
Flexible Exchange Rate: supply and demand for currency determines its price relative to other currencies
Fixed Exchange Rate: government intervenes in foreign currency market to maintain price of currency relative to other currency (e.g. US dollar) Managed/Dirty Float: mixture of both flexible and fixed exchange rates Balance of Trade: difference between value of merchandise (visible) exports and visible imports. The balance of trade is favourable if the country exports mores than it imports , and unfavourable when the country imports more than it exports. |