by Graham Lane,
Published in the Winnipeg Sun, June 29, 2018
Our beleaguered loonie is being battered again, reducing the purchasing power of all Canadians. How far will
the loonie fall? Trudeau and the Bank of Canada, are not concerned, they prefer a weak currency. Recall the
heady days of five years ago, when the loonie was close to par and we were complaining that retail stores and
automobile dealers were not reflecting this in their pricing.
In his quest for his definition of ‘fair trade’, President Trump mostly ignores a large factor favoring other
countries over the United States. Canada, European states using the Euro, and many other counties pro-actively
depreciate their currency against the ‘almighty’ American dollar to promote exporting goods and services to
the United States while reducing non-essential buying of American goods and services. The Bank of Canada
talks down the loonie and holds back matching rising U.S. interest rates at an immense cost to consumers.
Bank of Canada Governor Stephen Poloz is far too cozy with a Liberal government that prefers huge deficits,
low interest rates, and a weak loonie. Recently our wounded loonie plummeted to 75 cents US, making imports
even more expensive while making our exports, housing and companies a bargain for American buyers.
If the Trudeau and Poloz brain tank thinks deliberately pushing the loonie down will not be noticed by the
grumpy Donald, think again – they are wrong. He correctly sees it as it is. Here, north of 49, Canadians find
our dollars buy less and less of American technology, fruits, vegetables and southern vacation time, while gas
at the pump rises as the loonie falls. The loonie is at least 10% lower than it should be.
Depreciating Canada’s currency remains a weak and poor strategy. Bank of Canada’s governor Poloz keeps
our dollar down in the face of an American President that threatens to throw out NAFTA and punish Canadians
with tariffs. The export trade with America supports our standard of living, creating and maintaining hundreds
of thousands of jobs.. Deliberately talking the loonie down and maintaining too low interest rates could rightly
be seen as risky currency manipulation.
Our dollar brieﬂy hit $1.10 U.S. when oil was selling at over $100 a barrel. While oil, particularly in Canadian
currency, has risen from the depths, our wounded loonie struggles to keep above 75 cents US$. This is just one
cost of the Trudeau government’s climate change madness where deliberate “shoot ourselves in the foot” anti-
oil policies have shut down pipelines to higher priced global markets. Then, we also have the misguided B.C.
coalition government policies emasculating Alberta’s and Canada’s oil bonanza by blocking the last pipeline
now available to higher paying overseas markets. Meanwhile Bank Governor Poloz plays fiddle to
accommodate the weak and inexperienced Trudeau guided by his diverse band of green lefties.
Trump could correctly accuse Canada of currency manipulation. American subsidiaries in Canada are losing
value too. The best scenario in very difficult circumstances would have Trudeau surrender on the supply
management file (Canada levies massive tariffs on dairy, eggs and poultry – inconsistent with free trade and
damaging to Canadian consumers), increase interest rates and, finally, defend our dollar.
Trump smells weakness and will run over Trudeau’s brain trust and our consumers unless Trudeau acts