Quote:
Originally Posted by afc wimbledon
The rate was pegged from 62 to 70, I see no reason why 1900 to 62 shouldn't be taken into account. In fact I see no reason why the pegged rate shouldn't be taken into account either, it may have been pegged but obviously the rate was about right.
|
It was on the gold standard until April 10, 1933 rendering 1900 to 1933 data useless. At the outbreak of the second world war it was fixed at a rate of 1.1 to 1 US and then adjusted to a fixed rate of 1 to 1 until 1950, thus rendering data from August 1939 to 1950 useless. Let's also consider why they pegged it in 1962 again (Because the bottom fell out of the currency when the Diefenbaker government fell and there was a need for price stability)
So in summary, valid data:
April 10, 1933 to August 31, 1939
1950-1962
1970-present
I would venture a guess that the average isn't 0.98. The last 5 years data doesn't average 0.98 either. You cannot use pegged rates as historical comparisons because it isn't viable for the Bank of Canada to peg exchange rates anymore. It's beyond their control and their will to do it in a lot of ways. In fact if you've been reading the Bank of Canada's news releases the past few meetings, you would see that the dollar being this high is actually a huge concern of theirs as it renders a lot of our non-commodity industries uncompetitive with their American counterparts. Meaning in their perfect world, they would prefer a lower Canadian dollar.
I would be utterly shocked if Thomson's / True North's modelling of the transaction didn't have a low case dollar scenario built in. I'm not saying the dollar is immenently going to drop like a rock, in fact I believe in parody and above for the next few years. I just really don't like the dismissive attitude that gets taken on here about the dollar being a non-issue for the long term when in fact it is still a large concern.