Winnipeg Free Press - PRINT EDITION

Strong loonie actually the lamer duck

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The language around the valuation of the Canadian dollar is a funny thing. When the dollar is high -- meaning on par with or higher than the American dollar -- business commentators talk about its strength, its winning ways, how the loonie is riding high.

When economic circumstances change, as they have in the last couple of months, and the dollar loses value compared to the U.S. buck, it is weak. It's in free fall. It's getting hammered by other currencies.

In other words, if you believe the media, the dollar is hurting when it's low and winning when it's high. How strange that in the minds of many smart people, the opposite is true. When the dollar is high, Canadian manufacturers have more trouble exporting their wares. The tourism industry suffers because the lower value is one of the prime drivers behind getting Americans and others to spend their vacations here.

Recently, the Bank of Montreal reported a 10 per cent drop in currency might actually translate into a gross domestic product increase of 1.5 per cent over 24 months. Yes, some suffer with the low dollar. But there are more pluses than minuses, especially for manufacturing provinces like ours, when the dollar dips.

Republished from the Winnipeg Free Press print edition January 22, 2014 0

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