For once, Claude Brochu is on the right side of a slide in the Canadian dollar.
Mr. Brochu spent years struggling against a low loonie, when he was president, and eventually part owner, of the Montreal Expos from 1986 through 1999. Baseball fans in Montreal paid for tickets in Canadian dollars; the Expos paid players in U.S. greenbacks. So Mr. Brochu fielded not the team he wanted, but the team his poor, devalued loonies could afford.
OTTAWA — High-profile central banker Mark Carney is taking it on the chin these days with blows landing from both sides of the Atlantic.
The former Bank of Canada governor, who made international news last year by jumping ship to head the storied Bank of England, has been undergoing a serious grilling in London over the bank’s tame response to manipulation of foreign exchange rates.
And in Canada, CIBC chief economist Avery Shenfeld has written a note suggesting Carney may have left his successor, Stephen Poloz, with an economy more damaged than it needed to be.
The Bank of Governor Governor has been taking it on the chin lately, with pundits accusing him of everything from whipping up market volatility to talking down the Canadian dollar.
But economist Sherry Cooper says economists’ preoccupation with forward guidance is “pathetic” and they are just dumping on the Bank because they were wrong.
The news on the Canadian economy has been almost unrelentingly grim of late. The recent jobs numbers from Statistics Canada were shocking, the trade deficit keeps widening and so on. It’s not surprising then that the loonie is starting to show the strain, tumbling nearly 10% since the start of 2013, one of the biggest annual falls in more than two decades. But, depending on what you do for a living, that could be a good thing.
If you look at the fundamental factors driving the Canadian dollar, we think the outlook is all down
The loonie is set to fly south — soon, say TD economists, who are leading the bears with their forecast that Canada’s currency will drop as low as 90 US cents over the next year.
For the first time Canada’s loonie will join the U.S. greenback, euro and yen as official reserve currencies in International Monetary Fund data. The IMF said the Canadian and Australian dollar will be included in its Composition of Official Foreign Exchange Reserves from the third quarter. They’ve previously been included in an “other currencies” category in the COFER reports.