The Globe and Mail reposted this
The Canadian dollar is expected to weaken in the coming years as global economic conditions shift. Interest rates in Canada are likely to rise again, reflecting changes in U.S. monetary policy. Federal Reserve Chairman Jerome Powell indicated that the Fed may adopt a more cautious approach when it comes to cutting interest rates. This decision by the Fed will have a significant impact on the Canadian economy and its currency value. The latest from the Globe's business commentary, by John Rapley:
Rising interest rates and weaker currency at the same time? Besides … weaken against who? For a commodities exporting nation, a weaker currency is a plus.
Multi-Asset Portfolio Management | Global Economics and Financial Markets Storyteller
1wThis article is confusing one day interest rates set by the central bank and bond yields that create a yield curve to price long term government and corporate cost of borrowing capital. As Canadian bonds have outperformed US bonds in 2024, the current cost of borrowing capital for Canadian entities in Canadian dollars is materially lower. Add a weak currency, and you create a long overdue rebalancing of the economy away from household consumption (read: debt) to export led growth. Could also support domestic investment.