Volatility in the Canadian dollar is worrying, Finance Minister Jim Flaherty said on Friday after the currency shot up to a 13-month high, adding however that the currency’s strength partly reflects faith in the country’s economic fundamentals.
Canada’s dollar hit its highest level in over a year versus the U.S. dollar on Friday, a day after the Federal Reserve finally pulled the trigger on a bold new plan to stimulate the U.S. economy.
“We’ve seen some bump-up of the dollar, in part because of the announcement yesterday by Ben Bernanke in the United States about another round of quantitative easing there,” Mr. Flaherty told reporters in Oshawa, Ontario.
“Our country is relatively successful economically. Our fiscal and economic fundamentals are sound, and to some extent that’s reflected in our currency, being a currency in which people around the world have some faith. So, yes, I worry about volatility, although there is obviously some reason for the Canadian dollar being where it is today.”
The opposition New Democratic Party has criticized the Conservative government for the high currency, saying unfettered growth in the oil industry was boosting the Canadian dollar too high and therefore wreaking havoc in the manufacturing sector.
Mr. Flaherty reiterated the goal of balancing the budget in the next two to three years, saying the budget was currently on the right track, but said his projections could be changed if there were a shock from Europe or the United States or both.
“We’re always flexible and pragmatic ... It’s always important to watch the unemployment rate and to make sure that we can keep most Canadians working. We were successful in that back in 2008-09,” he said.
“We’d like (unemployment) to be lower, but we’ve done much better than the Americans have on the rate of unemployed people including young people in Canada. But as I say, we’re flexible. If we need to do more, we will do more. It’s vital we keep the Canadian economy growing, albeit at a moderate pace, which it is now, but at least it’s growing.”
Canada’s unemployment rate is 7.3 per cent. The U.S. rate is 8.1 per cent, but Canadian Prime Minister Stephen Harper said in a television interview this week that the gap would be even bigger if the two rates were calculated using the same methodology.