Currency's float helps, bank chief says

Published May 13, 2007

Canadians shouldn't expect to see any change in its "floating" currency, Bank of Canada governor David Dodge says.

Even though Canada's manufacturing sector is struggling to adjust to the recent steep rise in the Canadian dollar to around 90 cents U.S., allowing the currency to float is best, he said.

Having the Canadian dollar find its own value allows the world's economies to balance natural shifts that take place within a country's economic base, Dodge explained.

In fact, a flexible exchange rate regime has "definitely helped Canada to maintain production close to full capacity and to minimize the effects of the boom-bust cycles in various sectors, " he said.

Canada converted to a floating exchange rate in the 1950s but until 10 years ago the central bank occasionally intervened by buying and selling dollars to smooth out sharp fluctuations.

There has been a 35 percent appreciation against the U.S. dollar since 2003 that is good for travelers but has seen manufactured goods from Canada increase in price.

Poll: Support for government drops

Polls suggest Canadians are not impressed with the Conservative government's handling of allegations of abuse of Afghan detainees and its green energy plan.

The two issues have dominated parliamentary debate for the past month and have largely resulted in the minority government's drop in popular support.

A Decima poll found 55 percent believe it's likely that detainees captured by Canadian soldiers in Afghanistan end up being tortured by Afghan authorities. Authorities deny the allegations.

On a plan to cut greenhouse gas emissions, the poll found 47 percent of Canadians dissatisfied.

Moreover, two leading critics of the plan - environmentalist David Suzuki and former U.S. Vice President Al Gore - were deemed more credible than Environment Minister John Baird.

In brief

- Ontario Tourism Minister Jim Bradley says the United States will soon announce that residents of that province will be able to cross the border using a new, high-tech driver's license. This would be in place of using a passport, to be required next year, which officials of Canadian provinces and border states fear will cut business and tourism.

- Furniture giant Ikea has a deal for shoppers who drive hybrid or fuel-efficient vehicles. Planned is a "green parking" area a little closer to the front door at its 11 stores across the country by the end of the month. Ikea already has an anti-idling policy for customers loading their vehicles in pickup zones.

Facts and figures

Canada's dollar dropped below its lofty 90 cents U.S. level on Friday as Statistics Canada reported an overall drop of 5, 200 jobs in April. Even with the job losses, the unemployment rate was steady at 6.1 percent.

The dollar was 89.79 cents U.S. while the U.S. dollar returned $1.1137 in Canadian funds before bank exchange fees.

The Bank of Canada's key interest rate is steady at 4.25 percent while the prime lending rate is 6 percent.

Stock markets are higher, with the Toronto Stock Exchange index at 13, 932 points while the Canadian Venture Exchange is 3, 324 points.

Lotto 6-49: Wednesday 11, 17, 27, 32, 39 and 49; bonus 19. (May 5) 1, 23, 26, 28, 33 and 40; bonus 10.

Regional briefs

- Alberta has botched any advantages it might have gained from the oil boom in the resource-rich province, a think tank report says. Politicians are jeopardizing the future by "seriously underselling Alberta's resources" to the big oil companies, said Diana Gibson of the Parkland Institute at the University of Alberta. "Giving subsidies to the oil and gas sector at the time where they're making record profits year after year is not in line with other nations."

- Nova Scotia has started a mumps immunization program for health care workers as an outbreak of the virus in the province climbed to 222 cases. The program will include 40, 000 doses of measles, mumps and rubella vaccine. New cases in the Halifax region are declining while new cases across the province increased.

Jim Fox can be reached at canadareport@hotmail.com.