A weaker dollar is helping Canada’s economy cope with a drop in crude oil prices, central bank Deputy Governor Larry Schembri said.
Regions such as Alberta, Saskatchewan and Newfoundland are hurting from the drop in crude oil prices over the last year, Schembri said in response to questions after a speech Thursday in Windsor, Ontario.
Other parts of Canada are benefiting from the currency’s drop against the U.S. dollar and signs of an accelerating recovery south of the border, he said.
“We are seeing more strength in Ontario to compensate for the fact that oil production and investment is declining in Alberta,” Schembri said. “That kind of adjustment is facilitated by the flexible exchange rate.”
Canada’s dollar has depreciated by 13 percent against its U.S. counterpart over the last 12 months, making exporters more price competitive. It traded at C$1.2340 at 1:12 p.m. Toronto time. West Texas Intermediate is down almost 50 percent over that period.
Schembri is a member of the Governing Council at the Bank of Canada, which decided in January to cut interest rates to 0.75 percent.
Economists predict that rate won’t change this year, according to the median forecast in a Bloomberg News survey. The next decision is July 15.
bloomberg.com
Regions such as Alberta, Saskatchewan and Newfoundland are hurting from the drop in crude oil prices over the last year, Schembri said in response to questions after a speech Thursday in Windsor, Ontario.
Other parts of Canada are benefiting from the currency’s drop against the U.S. dollar and signs of an accelerating recovery south of the border, he said.
“We are seeing more strength in Ontario to compensate for the fact that oil production and investment is declining in Alberta,” Schembri said. “That kind of adjustment is facilitated by the flexible exchange rate.”
Canada’s dollar has depreciated by 13 percent against its U.S. counterpart over the last 12 months, making exporters more price competitive. It traded at C$1.2340 at 1:12 p.m. Toronto time. West Texas Intermediate is down almost 50 percent over that period.
Schembri is a member of the Governing Council at the Bank of Canada, which decided in January to cut interest rates to 0.75 percent.
Economists predict that rate won’t change this year, according to the median forecast in a Bloomberg News survey. The next decision is July 15.
bloomberg.com
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