CBC New | Business

Friday, March 11th 2016

Canadian dollar above 75 cents US, as oil moves
Ajay Tiwary
higher
March 9th, 2016
The Current Economic Events E-Portfolio: Entry #1
Summary:
This article revolves around the concept the Canadian dollar rising almost a penny against the
U.S. dollar, with respect to its cause and effects. As oil continues to rise, Bank of Canada decides
to maintain their interest rates creating a positive outlook on our economy. With this, Toronto
sticks repeated their growing trend and oil and markets have been rising in hopes to return to
stability. Furthermore, on an international scope, countries that are members of O.P.E.C are now
questioning if a meeting should be held to floor oil prices; as its stomping on their economies.
Economic Concepts:
The Bank of Canada and its monetary policies is a key economics concept mentioned in this
article. This bank has four functions including, supervising the operations of financial markets to
ensure stability. Moreover, they contain monetary policies that deals with contractionary and
expansionary phases for the economy. With the Lonnie increasing slightly, since its drastic
decrease the Bank of Canada can enforce expansionary monetary polices to increase the money
supply and lower interest rates, to eradicate a recessionary gap. For example, if the United States
were in another recession, they can begin cutting discount rates which translates to overall
interest rates. This action will not only prioritize economics activity, but ensure a positive
economic future.
Connections & Implications:
This article pertains to the Canadian dollar, oil, Bank of Canada, and many other economic
concepts. Through analyzing this event I began thinking about an indirect concept, imports and
exports. Exports and imports have a strong correlation with the Canadian dollar and its value.
Exporting is when a country sends goods or services to another country for sale, whereas
importing is the opposite. With the Canadian Lonnie increasing slightly, but still below the USD
exports become less expensive to foreigners. Whereas, a weaker Lonnie can be detrimental to
our imports as foreign products become more expensive. Overall, this article led myself to think
about Canadas export and import rates in relation to its slight increase of the dollar value.
My View:
Comprehensively, I agree with the arguments and its reasoning that this article provided. With oil
being a most-traded commodity, theres no doubt that the Canadian dollar rose above 75 center
as oil moved higher. Given ceteris paribus, the Canadian is an active exporter of importer of
crude oil. With this, when crude prices rise, Canada will receive more currency for selling it.
Resulting in the dollar strengthen through an increase of supply. Through prediction, if oil prices
and the dollar were to increase steadily, this would result in more income through exports.

Edited by:
Thushjan Balakumar

CBC New | Business

Canadian dollar above 75 cents US, as oil moves
higher
March 9th, 2016

Friday, March 11th 2016

Ajay Tiwary

Canadian dollar above 75 cents US, as

oil moves higher
Optimism fuelled by hopes of oil output freeze, but signals from
producers mixed
CBC News Posted: Mar 09, 2016 11:12 AM ET Last Updated: Mar 09, 2016 4:25 PM ET

Traders are hoping for an agreement from oil producers on freezing output. (Matthew Brown/Associated Press)

http://www.cbc.ca/news/business/tax-dollar-markets-1.3483275
The loonie rose by almost a penny against the U.S. dollar on Wednesday, as oil resumed its
climb and the Bank of Canada kept interest rates unchanged.
Toronto stocks also resumed their rally today as crude moved higher in anticipation of an output
freeze by major producers.
Brent oil, the main international contract, was above $40 US a barrel at $40.87, after falling
sharply Tuesday.
West Texas Intermediate, the benchmark North American contract, had risen 4.7 per cent by the
close, to $38.29 US a barrel, after a sharp fall Tuesday.
The TSX broke an eight-day winning streak with a down day Tuesday, but on Wednesday at
midday it was ahead 88 points, to 13,398.
It is seven years since the big market crash of March 9, 2009. The TSX has risen 77 per cent
since that day, when it closed at 7,567.

Edited by:
Thushjan Balakumar

CBC New | Business

Canadian dollar above 75 cents US, as oil moves
higher
March 9th, 2016

Friday, March 11th 2016

Ajay Tiwary

Bank of Canada keeps key interest rate at 0.5%

In late afternoon, the Canadian dollar was at 75.51 cents US, up .93 of a cent, and just below its
peak of the day.
The Bank of Canada's decision to keep its key interest rate unchanged was broadly expected,
but it meant a more positive outlook on the Canadian economy from the central bank.
Oil and markets have been rising for more than three weeks on hopes of a return to stability in
oil prices until Tuesday's rout.

Meeting details in doubt

The signals are mixed from oil producers around the world on whether there will be a concerted
effort to put a floor on oil prices.
An Iraqi oil official told a state newspaper today that there is a plan for members of the
Organization of the Petroleum Exporting Countries to meet March 20 in Moscow with nonOPEC producers.
However, Russian Energy Minister Alexander Novak has said through a spokeswoman there is
no set place or time for such a meeting.
The hope is that large producers such as Saudi Arabia and Russia are tired of selling their oil at
cheap prices, with the corresponding drop in government revenues.
Saudi Arabia, which has had balanced budgets for years, had a deficit equal to 15 per cent of its
GDP in 2015 and is looking at another deficit in 2016. It is expected to tap bond markets for $31
billion US in new debt this year.
Smaller OPEC members such as Venezuela are keen for an agreement as low oil prices have
played havoc with their economies.
But Iran, which has been subject to an embargo for years, is keen to expand its exports. Its
delivery of one million barrels of crude to European shores on Sunday helped depress oil prices
on Monday.
Iran's goal is to double its output to two million barrels a day.

Edited by:
Thushjan Balakumar

CBC New | Business

Canadian dollar above 75 cents US, as oil moves
higher
March 9th, 2016

Friday, March 11th 2016

Ajay Tiwary

Also a positive for oil was data from the U.S. Energy Information Administration that showed
crude stockpiles rising in line with expectations, but gasoline stocks falling.
Oil stocks rose by 3.9 million barrels in the previous week to a total of 521.9 million barrels, but
total motor gasoline stockpiles dropped by 4.5 million barrels, and distillate fuel stocks also
decreased by 1.1 million barrels, an indication the demand is rising..
Markets in Europe closed with gains and New York's Dow industrial average edged up 36 points
at 17,000, while the broader S&P rose seven points to 1986.
There is optimism in Europe over the European Central Bank decision on interest rates due
Thursday. The European Central Bank is expected to extend or even expand its stimulus
program.

Edited by:
Thushjan Balakumar