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Letter to the editor

Leveling loonie takes pressure off economy

By JIM FOX, Times Correspondent
Published December 9, 2007

The Canadian dollar's retreat to just below parity with the U.S. currency puts it about where it should be, Bank of Canada Governor David Dodge says.

While not specifying exactly what he feels the dollar is worth, the retiring head of Canada's central bank said the fundamentals justify where it is now.

The dollar's recent spike to a record $1.10 U.S. remains largely inexplicable, Dodge told the Senate banking committee.

Both Finance Minister Jim Flaherty and Dodge have opposed suggestions the dollar be pegged at a certain value against its U.S. counterpart. They also oppose Canada and the United States adopting a single currency.

The bank trimmed short-term interest rates by a quarter percentage point to 4.25 percent as inflationary pressures eased, and further cuts are expected.

Dodge said worsening difficulties in financial markets, the U.S. subprime mortgage crisis and weakening U.S. demand have lessened the risk of inflation.

Former Finance Department official Mark Carney will take over from Dodge in late January.

News in brief

-Former media baron Conrad Black, who will be sentenced Monday in Chicago for fraud and obstruction of justice, said he will not back down, nor will he apologize. Saying he is not guilty and calling the evidence "flimsy," the Montreal native said "reasonable people" will understand why he would not show "false remorse for acts I did not commit."

-A white rose was placed Thursday on each of the stainless steel monuments dedicated to the 14 young women murdered at Montreal's Ecole Polytechnique 18 years ago. Also, 14 white ribbons were tied to trees as a reminder of the shooting rampage by gunman Marc Lepine at the engineering school.

-Canada's six largest banks had a record $19.51-billion in profits in fiscal 2007 despite multimillion dollar write-downs related to the credit crisis in the United States. Scotiabank was the last to report its full-year earnings at a record $4.05-billion.

Facts and figures

Lower interest rates pushed Canada's dollar down to 99.56 cents U.S. while the U.S. greenback was $1.0045 Canadian before bank exchanges fees.

Statistics Canada said 43,000 new jobs were created last month even though the jobless rate rose for the first time in a year to 5.8 percent, from 5.7 percent.

The Bank of Canada lowered its key interest rate to 4.25 percent, which caused the prime lending rate to fall to 6 percent.

Canadian stock markets were mixed Friday with the Toronto Exchange index higher at 13,857 points while the TSX Venture Exchange was lower at 2,710 points.

Lotto 6-49: Wednesday 1, 2, 23, 29, 30, 42; bonus 12. (Dec. 1) 16, 21, 31, 40, 43 and 45; bonus 37. Super 7: (Nov. 30) 5, 14, 27, 30, 31, 32, 44; bonus 19.

Regional briefs

-A fire early Friday roared through downtown Barrie, Ontario, north of Toronto, destroying or damaging eight buildings and forcing 50 people from apartments. The fire started after an explosion in a restaurant basement. There were no injuries.

-Observers are calling rookie Alberta Premier Ed Stelmach an "activist" compared to the retired Ralph Klein. Stelmach herded 28 bills through the legislature in 18 days and set the course for a spring provincial election just before adjourning for the Christmas break.

-Manitoba politicians are making plans for Senate reform even though Premier Gary Doer thinks the largely ceremonial body should be abolished. An all-party committee will hold public hearings on how senators should be elected.

-The Supreme Court of Canada has refused to hear the case of residents of Delta, south of Vancouver, in their fight to stop the installation of high-voltage power lines nearby. Fearing a health hazard, they want the lines to be buried instead.

-The Nova Scotia government announced a $75-million deal to bring high-speed Internet to more rural areas.

- Residents of Newfoundland's Bonavista Peninsula were boiling their drinking water at midweek after power outages from a snow storm.

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

[Last modified December 9, 2007, 01:47:05]