Phil Franz-Warkentin, Commodity News Service Canada
Winnipeg, Nov. 4 – The weaker Canadian dollar is here for at least for the foreseeable future, said Doug Porter, chief economist with BMO Capital Markets, in a presentation on the Canadian economy at the Cereals North America conference
The dramatic decline in the Canadian currency from parity with its U.S. counterpart in 2013 to current levels of around US75 cents has created winners and losers, said Porter.
Winners include anyone who is competing internationally – such as farmers – while average consumers are on the other side of that scale as the prices of imported goods rise.
Porter said sharp declines in crude oil prices were a major influence keeping the Canadian dollar under pressure. While crude oil is expected to start to show some improvement, he said any improvement on that front would be countered by the relative strength of the U.S. dollar.
Porter said Bank of Canada governor Stephen Poloz appears to be “more sympathetic to the plight of exporters,” perhaps as a result of being president of Export Development Canada prior to his appointment.
Porter had a target of US75 cents for the Canadian dollar for the end of 2015, with the currency improving only slightly by the end of 2016 to 78 cents.
“The (weak) Canadian dollar has really helped the Canadian farmer,” said Mark Dyck, director of logistics with G3 Canada Ltd. (formerly CWB), in a separate presentation.
He said exchange rates were a major reason why Canada’s railways are now running near capacity, while American farmers are not delivering into the pipeline and U.S. grain transportation is running considerably below capacity.
