Canada report

Canadian dollar's rise worries analysts

While Canada's high-flying dollar is a blessing for snowbirds, there are growing concerns that manufacturers soon could find they simply can't compete on the world market.

At a 12-year high, around 85 U.S. cents, the dollar's fast climb from the high 60s might cause Bank of Canada Governor David Dodge to decide against an interest rate increase this month. The currency's relentless rise has surprised many and caused turmoil among market watchers.

"If current exchange rates were to be sustained - and if all other economic and financial factors were to remain unchanged - this would have a dampening effect on aggregate demand for Canadian goods and services," Dodge said.

The dollar's rise throughout the fall was a natural reaction to high prices and strong demand for Canadian commodities, he said. Now, however, it's rising more quickly in reaction to the steady drop in global confidence around the U.S. dollar.

The bank increased the key interest rate twice this fall to its current 2.5 percent.

Some analysts predict that healthy economic gains and a steady jobless rate about 7.1 percent could persuade Dodge to continue increasing rates.

Canada Post is reassuring Canadians their holiday mail will not be affected if its administrative, clerical and technical workers go on strike.

About 2,600 workers, represented by the Public Service Alliance of Canada, voted 73 percent to strike as soon as Wednesday.

"These people do not collect, process or deliver the mail . . . there will be absolutely no mail delays," Canada Post spokesman John Caines said.

Union president Luc Guevremont said workers could begin with strategic strikes one region at a time but he wouldn't rule out a general strike.

Wages, benefits and working conditions are the issues as Canada Post seeks concessions on health and dental benefits and vacations.

Pierre Berton, legendary Canadian author, nationalist and broadcaster, died in Toronto after a lengthy illness. The author of 40 books, many of them on Canadian history and places, was 84.

Often criticized for a lavish lifestyle and expensive trips at the expense of taxpayers, the $19-million annual budget of Governor-General Adrienne Clarkson was cut by the government by $417,000. She was appointed by the Liberal government as Queen Elizabeth II's current representative in Canada.

"It's not too much to ask for the governor-general to have to switch brands of caviar and find a more efficient way of running Rideau Hall," said New Democrat Member of Parliament Pat Martin.

Mad cow disease and drought hit farmers hard last year, pushing their net cash income down to levels not seen in 25 years. Income fell 39.1 percent to $4.4-billion, the lowest since 1978, Statistics Canada said.

Only Nova Scotia, Quebec and British Columbia farmers reported increases.

Canada's dollar is still showing muscle at 83.88 U.S. cents, even though it fell after the U.S. Thanksgiving by more than 1 cent. The U.S. dollar is worth $1.1925 Canadian before bank exchange fees.

The Bank of Canada key interest rate is steady at 2.5 percent, while the prime lending rate is 4.25 percent.

Canadian stock markets are higher, with Toronto's composite index at 9,043 points and the Canadian Venture Exchange 1,711 points.

Lotto 6-49: (Wednesday) 4, 23, 26, 35, 36 and 40; bonus 48. (Nov. 27) 12, 15, 30, 38, 47 and 48; bonus 27.

Jim Fox can be reached at canadareport@hotmail.com

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