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Letter to the editor

For now, Harper will let loonie continue to rise

By JIM FOX, Times Correspondent
Published November 11, 2007

Prime Minister Stephen Harper isn't prepared to interfere with monetary policies even over concerns the Canadian dollar has risen too high too quickly.

The currency hit a record $1.10 U.S. before easing back to $1.06, but there are concerns the rapid acceleration is damaging the economy.

While the news is good for U.S.-bound shoppers and "snowbirds" wintering in America, manufacturers and exporters are hurting as Canadian goods are much more expensive.

Ontario Premier Dalton McGuinty called on Harper's government to tell the Bank of Canada to lower interest rates to make the dollar less attractive to foreign investors.

The fundamentals of the Canadian economy are showing "tremendous resiliency" and tens of thousands of jobs are being created each month, Harper said.

It is not the federal government's role to dictate the policies of the central bank, Finance Minister Jim Flaherty said.

Canadian retailers have been trimming prices to stem the flow of cross-border shopping. Wal-Mart now charges the U.S. price, instead of the higher Canadian one, printed on books, magazines and greeting cards.

Stronger dollar means cheaper gasoline

Canadians are paying lower prices for gasoline because of the stronger dollar.

The price break is because Canada pays the world price for oil set in U.S. dollars.

The national average price for regular gas in Canada is $1.024 Canadian a liter while the lowest is in oil-rich Alberta around 93 cents.

Analysts say gas prices now would be around $1.60 a liter if the dollar was still at its lowest of 62 cents U.S. five years ago.

Even so, Canadians are still paying more than Americans because of higher federal and provincial taxes imposed on gas. For comparison, at $3 per gallon, gas would cost about 79 cents per liter.

News in brief

-An incoming rocket whizzed overhead and exploded as Defense Minister Peter MacKay visited Canadian troops at a base in Afghanistan. MacKay was quickly escorted to a safer spot and wasn't injured. A second attack 15 minutes later hit the base, causing minor injuries to four soldiers.

-Canada is contributing $500,000 to relief, recovery and reconstruction efforts in flood-ravaged Mexico. The aid will go to the International Federation of Red Cross, Red Crescent Societies and local partners to support efforts in Tabasco state. The Canadian government has also offered humanitarian aid if requested.

-The wisdom of sending young Mountie recruits to work in the Arctic and to go on patrol alone is being debated after the killing of Constable Douglas Scott, 20, from Lyn, near Brockville, Ontario. He was shot while investigating a call about a drunk driver in Nunavut. He was the second Mountie to be slain in the past month in the region.

Facts and figures

Canada's dollar leveled a little on Friday, dropping to $1.0629 U.S., after topping $1.10 U.S. The American greenback was worth 94.09 cents Canadian.

Trade figures for September weighed on the currency as exports dropped 2.3 percent with sharp declines in machinery, industrial goods and materials.

There's no change in the Bank of Canada's key interest rate of 4.5 percent or the prime lending rate at 6.25 percent.

Stock markets were lower with the Toronto index at 13,876 points and the TSX Venture Exchange 3,033 points.

Lotto 6-49: (Wednesday) 4, 12, 24, 25, 37, 49; bonus 33. (Nov. 3) 8, 23, 33, 40, 46, 49; bonus 37.

Regional briefs

-The remnants of Hurricane Noel hit eastern Canada hard, washing out roads, downing trees and leaving 200,000 homes and businesses without power. Heavy rain with winds gusting to 100 mph affected coastal areas throughout Nova Scotia. Prince Edward Island, New Brunswick, Newfoundland and Labrador, and eastern Quebec.

-Sixteen years of New Democratic government ended in Saskatchewan with the election of the Saskatchewan Party and Premier-designate Brad Wall. The right-of-center party won 37 of the 58 seats in the Legislature. Although his government was defeated, former Premier Lorne Calvert was re-elected in Saskatoon-Riversdale.

-Quebec has renamed part of Highway 20 to honor Canada's soldiers. Veterans' Memorial Highway, or Autoroute du Souvenir, is the new name of a 30-mile stretch from Montreal to Riviere Beaudette.

-Two tourists from Taiwan were killed when a tour bus crashed on the Trans-Canada Highway in the mountains of southern British Columbia west of Golden. In northern Alberta, a Greyhound bus hit a patch of ice and flipped over killing three people.

Jim Fox can be reachedat canadareport@hotmail.com.

[Last modified November 11, 2007, 02:32:17]