Canada promises to forego intervention

The role of Central Banks in forex markets has become a hotly debated topic, as banks around the world continuously to intervene to prevent their currencies from appreciating. Canada is one of the few countries that has not attempted to stifle a significant rise in its currency. By all accounts, Canada should be an obvious candidate for intervention, for a strong Canadian Dollar (“Loonie”) has punished its export-driven economy. Canadian leaders, however, argue that the appreciating Loonie has forced Canadian businesses to become more efficient, and thus, welcome a more expensive currency. It has pledged to stay out of currency markets and allow market forces to determine the value of the Loonie. Bloomberg News reports:

Canada, which buys more U.S. goods than any other country, suggested it will keep out of currency markets for another five years and warned other nations to follow suit or face a global slowdown from trade imbalances.

Read More: Canada to Keep Out of Exchange Markets, Wants Others to Follow

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