Outline
Canada is considered to be a country with a stable economy and good perspectives
of sustained and long-termed development. One of the main indicators of the
economic stability and high perspectives is the national currency, Canadian
dollar, and its value.
On analysing the value of the Canadian dollar within the last five years from
2000 to 2005, it is necessary to take into consideration several factors influencing
its value. First of all, it should be said that the process of economic globalisation
plays an important role in the value of the Canadian dollar since it contributes
to Canada’s integration in the world economy and creates new opportunities
for Canadian companies to enter new markets, increase its export, and, consequently,
strengthen national currency.
At this respect, the active participation of Canada in NAFTA should be pointed
out since it involves Canada into free trade with the countries members of this
organisation and such a situation produces a positive impact on the development
of the Canadian economy at large and increase the value of the Canadian dollar
in particular.
Probably one of the most important factors influencing the value of the Canadian
dollar is its trade and cooperation with the US. Not surprisingly that there
are common trends in the Canadian American trade and the value of the Canadian
dollar. It should be pointed out that in the period from 2000 to 2005 the trade
balance of Canada with the US constantly remained positive and the lowest point
is +67,975 million US dollars but since 2004 it has started to grow dramatically
and constituted +92,492 million US dollars. At this respect it is quite noteworthy
to trace the dynamics of the value of the Canadian dollar, which also has risen
dramatically from a value of $0.6568 in December 2000 to $0,8613 in December
2005. In such a situation it the interdependence of the trade balance and Canadian
export, on the one hand, and the value of the Canadian dollar, on the other,
is obvious.
Another important factor that influences the value of the Canadian dollar is
the development of Canadian industries. However, their impact on the value of
the Canadian dollar is predetermined by the fact that basic Canadian industries
their depend on exports, the degree to which they face competing imports at
home and the extent to which the imported inputs are used. In such a situation,
the increase of the value of the Canadian dollar compared to 2000-2004 is predetermined
by the growth of exports, positive trade balance, and development of export-oriented
industries.
Thus, the value of the Canadian dollar, being relatively stable, in recent years,
notably in 2004 has grown quite significantly. Basically it is predetermined
by the situation in the international trade and active cooperation and trade
of Canada with its geographic neighbour, the US, as well as other foreign countries.
At the same time, it makes the value of Canadian dollar, as well as its basic
industries to dependent on the situation in foreign markets and international
trade.
Bibliography:
1. Canadian Broadcast Corporation, “Economy Expected to Grow 3.2 Percent
in 2006: Royal Bank,” found at http://www.cbc.ca/story/business/national/2005/economy.php,
retrieved Feb. 14, 2006.
2. Canadian Broadcast Corporation, “Big Three Market Share Rebounds in
Canada; Slips in U.S.,” found at http://www.cbc.ca/story/business/national/2005/economy.php,
retrieved Feb. 14, 2006.
3. Organization for Economic Co-operation and Development (OECD), “Main
Economic Indicators 2005,” Apr. 2005, found at http://lysander.sourceoecd.org/vl=7640236/cl=65/nw=1/rpsv/ij/oecdjournals/04745523/v2005n4/s1/p1l,
retrieved Feb. 14, 2006.
4. Warren, Adrienne. “NAFTA Quarterly,” Scotiabank Group, winter
2005.
