Quote:
Originally Posted by GoinAllTheWay
Good posts.
I had always wondered why a high dollar value was bad for Canada. If it's bad for us, why wouldn't it be bad for the US? What possible reason could you have for wanting your dollar to be worth less? For as long as I can remeber, the Canadian dollar has always been worth less than a US dollar and for the life of me, I could never understand why that would be a good thing.
Can't say I fully understand it yet but if someone could dumb it down a bit for that would be awesome.
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The USA has more imports than exports. The cost to buy these imports is usually done in the foreign currency (majority I think). With a high USD, they have more purchasing power (more foreign dollars when converted) and are able to import the product cheaper. Compare this to a high USD and now they are unable to buy the same amount of product for the same amount of USD.
For an exporting country like Canada, when our dollar is low, foreign countries are likely to spend money and buy our products. This leaves an industry with large demand and good incomes. Switch this around, and you are left with a drop in exports and a slow down in industry.
It can be a lot more complicated than that, but should be a good brief explanation.