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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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Man, this blows. I live in Canada, but I get paid in US dollars. What used to get me 1.57 CAD now gets me around 1.27, and its probably going to go as low as 1.20 within the year. I remember getting as high as 1.60 just months ago. This must be some kind of artificial deflation... it happened too fast. And its not like we're talking about the Russian ruble (sp), we're talking about the US dollar, one of the strongest in the world.
Now I know that this is good for the (US) economy in that there is virtually a 15% (my math sucks) discount on all US products and exports are going to go through the roof, but I don't care, I want my money now! 
IMO this is just temporary and related to a slowdown in the economy related to the war, ect, ect... but it still sucks for all Americans living abroad (and there are tons). I fear that with Bush still as president, investor confidence in the USD is going to stay low... whereas if a democrat was in power, confidence might potentially rise. But I don't want to have to wait until 2004, and Bush is probably going to win again anyways.
Its tough, you know, because I supported, and still do, his actions against Iraq, etc, but I'm suffering for it directly now.
I'm no economics major though, so those of you who are experts, please correct me on anything.
So what are you guys' predictions for the dollar? How soon do you think before it rises again, or will it?
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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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quote:
Originally posted by DanS
It has little or nothing to do with Iraq. It has to do with our current account deficit. This will take some time to work out, even with a healthy economy. |
Explain. So you think Iraq is just a coincidence? I do see what you're saying though... I'm just not an economy expert.
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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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quote:
Originally posted by DanS
So you think Iraq is just a coincidence?
Yes.
The US' sizeable trade deficit has to be matched with investment coming from overseas. As appetite for US investment wanes (because of low interest rates in the US, for instance), the value of the currency falls. The currency fall makes foreign goods more expensive, leading to fewer people buying them, leading to lower trade deficits.
The whole cycle lasts years and the deficit normally gets worse before it gets better. |
Damn. So what do you think this will do to the Canadian dollar, where we buy something like 80 percent of their exports? My only hope I guess is for the loonie to tank.
edit: loonie means dollar
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DanS
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Kickball Capital of the World
Jan 1970
time: 00:28
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It's tough to know what will happen. Since investment from somewhere overseas has to offset any trade deficit, any corner turned will depend on the appetite of overseas investors for US assets, and on US appetite for foreign goods.
There are a lot of things tied up into how much people want to invest in the US. Perceptions, interest rates, American trustworthiness, economic growth, security concerns and security business impediments, etc.
US appetite for foreign goods is probably easier to figure out. If it costs more money, Americans will eventually buy less of the item.
Last edited by DanS on 22-05-2003 at 20:14
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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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quote:
Originally posted by DAVOUT
Being paid in US $ when you make your expenses in CAD is a speculation against the CAD. It was sometimes winning, as you recall, but now it is a loosing game. Individual (and business) should not speculate on currencies. In your case, you should be paid in CAD. |
Well, I'm a student and my money comes from a long time worth of saving while still living in the US... and from summers when I have gone home and worked. I don't actually work here right now, although I will soon.
But still, 1.25 isn't quite chump change... its just that the CAD took a nose dive a few years ago.
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Flubber
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With a view of the Rockies
Aug 2000
time: 22:28
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The fall against the Canadian dollar was overdue IMHO. Over the last few years the US dollar had gained against the looney despite strong fundamentals in the Canadian economy. Analysts were having a difficult time explaining the trend. The drop of the US dollar is probably faster than most would like but, against Canadian currency, it is just giving back gains that made little sense.
On the personal side, I sympathyze with your losses but at the same time it will make a trip south of the border very much cheaper for me
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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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quote:
Originally posted by Kidicious
What are the benefits of currency union? I mean all other countries have to do is tie their currency to the US dollar. Then if they want they can change it later. If Canada and Mexico formed a currency union with the US they would lose control over their own monetary policy. |
Well, it could mean a shared central bank and joint rates, etc... but that would mean the two contries would have to concede certain powers, which might not be a good idea, depending on how you look at it. I don't know what to think really.
But I think it might just be better to permanently peg the CAD to around US1.50 or so. I know it might seem selfish due to my situation, but a low loonie benefits Canada by encouraging exports, and US investors get more bang for their buck and Americans get cheaper products. Even PM Chretien has publicly supported a low dollar as being good for the economy.
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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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quote:
Inflation, dollar dive - rates next?
Central bank's 'fears quashed in one fell swoop': Currency has biggest drop since '76 as prices grow stabler, suggesting economy is slowing
Jacqueline Thorpe
National Post, with files from news services
Friday, May 23, 2003
The Canadian dollar plunged US1.33¢ yesterday, its steepest drop in more than 25 years, after lower inflation figures led investors to bet the Bank of Canada would not raise interest rates and could even cut them.
The dollar closed trading at US72.79¢, an abrupt drop that ended months of growth against the American dollar. Until yesterday's decline, the loonie had appreciated by 16.4% since the beginning of the year.
The drop, the largest since 1976, followed a surprising report from Statistics Canada showing the inflation rate fell to 3.0% in April from 4.3% in March. Economists had predicted the rate would come in at 3.6%.
The Bank of Canada's core inflation measure, which excludes eight volatile items such as gasoline and fruit, dropped to 2.1% from 2.9%.
The central bank's inflation target is 2%.
"It's got people talking about rate cuts instead of rate hikes from the Bank of Canada and it's a huge turnaround from where we were just a few days ago," said Steve Butler, director of foreign exchange trading at Scotia Capital.
Adding to the dollar's decline was an admission from the Bank of Canada that the currency had risen faster than the bank had expected.
"The magnitude and speed of the movement of the Canadian dollar have been greater than anyone had anticipated, and we are in the process of assessing the implications of this movement," Paul Jenkins, senior deputy governor of the Bank of Canada, said in a speech to the Economic Club of Toronto.
Last month, the bank raised its rates to 3.25% from 3.0% -- its fifth rate hike in a year -- and said it might have to raise them further to cool an economy operating close to capacity.
But the Statistics Canada report quelled that prospect. "It's as if the Bank of Canada's inflation fears have been quashed in one fell swoop," said Marc Lévesque, senior economist with Toronto-Dominion Bank.
Today the Bank of Canada is facing an entirely different situation.
Higher interest rates -- more than double U.S. rates -- have become a magnet for international investors, who have sent the Canadian dollar on its most rapid appreciation on record.
il yesterday's sharp move down, the dollar had risen US10¢ since the beginning of the year. The move has suddenly made Canadian exports much more expensive on world markets and could curb growth significantly, economists say.
Meanwhile, the U.S. economy has so far failed to bounce back after the Iraq war and is swimming in so much spare industrial capacity that analysts are worried about the opposite of inflation -- deflation, or falling prices. Germany is on the brink of recession and Japan continues to stagnate.
the sluggish U.S. economy does not recover soon, boosting demand for Canadian exports, the central bank might stand pat on rates for some time to come, Mr. Lévesque said.
"I think they might sit out of the rest of the year, depending on what the U.S. economy does."
Add in the possible impact of mad cow disease to the Alberta beef industry and the effect of Toronto's SARS scare on the tourism industry, and analysts say the outlook for the Canadian economy has dimmed.
"A steady course is important but the rapidity of the change of economic circumstances in the last three months is such that a rethink of the general direction in rates is very, very needed right now," said Warren Jestin, chief economist at Bank of Nova Scotia.
He added that if the dollar resumes its upward charge the bank might have to consider cutting rates.
Ted Carmichael, chief Canadian economist at J.P. Morgan in Toronto, expects inflation to fall toward 1.5%-2% by the end of the summer.
"We don't think there will be a rate hike until the middle of 2004 at the earliest and the market will be increasingly look at whether a rate cut is needed," he said. "That will probably depend on whether the Canadian dollar hangs on to the gains it has and goes further."
"If it keeps going, the case for a rate cut is going to build."
Other economists said there needs to be further evidence the economy is slowing before the bank can contemplate cutting rates.
"It's a little premature to start the talk of Bank of Canada easing," said Warren Lovely, economist at CIBC World Markets. "They'll need more than one downside inflation surprise, and hard evidence that the economy is meaningfully backing away from capacity limitations, before switching into easing mode."
Statistics Canada said a 9% drop in gasoline prices from March to April was the main reason for the decline in inflation. Electricity, shelter, transportation and clothing costs were also all down in the month while health services, alcohol and tobacco prices rose.
With the Canadian dollar still riding high compared to the American dollar, some economists say they expect inflation to continue to fall.
"For exporters, the rise in the Canadian dollar over the past two weeks is equivalent to a 15% price cut," said Jayson Myers, an economist with the Canadian Manufacturers and Exporters association.
"In other words, a $1-million U.S. contract today is worth about $150,000 less in Canadian dollars."
The only way manufacturers can compensate for such losses is through significant cost-cutting, he added, driving inflation even further down.
"In fact, there are clear signals of deflation in many sectors of Canadian industry," he added. "The higher Canadian dollar is expected to cool inflation even further as prices of U.S. imports fall and economic growth slows because of cost cutting by Canadian exporters adapting to the higher dollar."
jthorpe@nationalpost.com
© Copyright 2003 National Post |
http://www.nationalpost.com/home/st...C9-4A3A32CA435C
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JimmyCracksCorn
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Macedonia - Sovereign country north of Greece.
Dec 2002
time: 05:28
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quote:
Originally posted by Seeker
I Feel the Pain in this thread.
I'm getting less CAD for the Korean Won I get paid in.
And the Yanks around here are getting it even worse, they lose hundreds.
As long as the dollar falls though, the Won goes up a little so that helps.
Dare I hope for $1=700W? I could really clean up at that rate. (2.1 mil Won per month)
DinoDoc: Get off the DONG and start researching asian currencies for us hapless arts majors floundering in seas of Asian economic turmoil!! |
So you live in Canada and get paid in Won? I didn't realize the won was dropping too. I feel your pain.
Maybe with what the article I posted says above, we will see some more $$ soon...
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22-05-2003 19:06
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