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Loonie rally isn't necessarily good for recovery

The Canadian dollar's surge to within pennies of parity with U.S. currency is good news for "snowbirds" but not so good for the economic recovery.

The dollar topped 97 cents, up more than 10 cents from a year ago. And that could damage the pace of Canada's recovery, Prime Minister Stephen Harper said.

A higher-valued dollar makes goods manufactured in Canada more expensive in the United States and world markets.

Exports account for about 35 percent of Canada's gross domestic product, with about 75 percent of those exports going to the United States.

With every 1 cent appreciation of the Canadian dollar against U.S. currency, the Canadian Manufacturers and Exporters association estimates a drop in sales of about $2 billion, equal to about 25,000 jobs.

Pressure has been building on the Bank of Canada to intervene after the dollar rose more than 5 cents in the past two weeks. As one step, the bank could buy up large amounts of U.S. dollars to devalue Canada's currency and bring it down.

"I don't think it's a risk to choking off the recovery, but if it goes up too rapidly it does have difficult effects on our economy," Harper said.

Canadian snowbirds and shoppers spending money in the United States get a better deal for their dollars now. At home, consumers will be looking for lower prices on imported goods.

Most swine flu is found in B.C.

Canada has seen increased cases of swine flu, including two recent deaths in British Columbia and Ontario.

Eighty Canadians have died from the virus since it was first reported in Canada in April.

Federal Health Minister Leona Aglukkaq said British Columbia is where the most outbreaks have been reported, largely in the South Island, Lower Mainland and the province's interior.

Vaccinations against the potentially deadly virus are expected to begin within a month.

News in brief

• Communications giant Canwest Global is having its stock delisted from the Toronto exchange Nov. 13 after it filed for creditor protection with $4 billion in debts. The company, which owns newspapers, TV stations and specialty channels, expects its restructuring to be completed by Jan 31. Its stock is now worth only about 20 cents.

• The Winnipeg Free Press will stop printing a full Sunday edition next month to cut costs. The paper, owned by FP Newspapers Income Fund, said the edition will be replaced with a "compact-size product" called Free Press on 7, and its Saturday edition will be expanded.

Facts and figures

Canada's dollar settled in at 96.46 cents U.S. on Friday while the U.S. greenback was worth $1.0367 Canadian, before bank exchange fees.

The national inflation rate remained below zero for the fourth consecutive month in September at minus 0.9 percent, matching a 53-year low. Lower gasoline prices, down 23 percent from a year ago, helped keep the rate down.

The Bank of Canada's interest rate is unchanged at 0.25 percent and the prime lending rate is 2.25 percent.

Stock exchanges are higher, with Toronto's composite index at 11,497 points and the TSX Venture index 1,322 points.

Lotto 6-49: (Wednesday) 4, 17, 19, 22, 24, 46; bonus 30. (Oct. 10) 5, 11, 12, 22, 23, 26; bonus 41. Lotto Max: (Oct. 9) 5, 15, 25, 38, 42, 46, 47; bonus 26.

Regional briefs

• Albertans can expect better times ahead as Premier Ed Stelmach said his government would return to a surplus position in three years and make improvements to the health care system. Stelmach talked of plans to get the province through the "worst global recession in half a century" without raising taxes.

• Nineteen Quebec prisoners are contesting a rule prohibiting inmates from smoking inside or on the grounds of federal prisons, saying it contravenes their civil rights. "Smoking is part of our culture, it's a choice," said lawyer Julius Grey, adding that cigarettes are not illegal and that it's "absurd" to prohibit inmates from lighting up.

• Bell Aliant is closing call centers with fewer than 50 employees in Atlantic Canada by next April. Eastern Canada's largest phone company said its 16 centers employ about 1,400 people. Affected workers will be offered jobs at larger centers in Charlottetown, Halifax, Moncton, Saint John and Mount Pearl.

Jim Fox can be reached at [email protected]

Loonie rally isn't necessarily good for recovery 10/17/09 [Last modified: Saturday, October 17, 2009 8:22pm]
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