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MNI BRIEF: BOC Says Link Between CAD, Commodities Has Weakened


Bank of Canada Deputy Governor Toni Gravelle said Thursday that the relationship between the country's exchange rate and commodity prices has weakened, meaning more imported inflation.

"The Canadian dollar would typically appreciate alongside the rising trajectory of our commodity prices, but we’re not seeing much of that now," Gravelle said in a speech. Investors see less long-term demand for fossil fuels and Canadian investment will likely grow only half as much in this commodity boom as it did in past cycles, Gravelle said.

Other forces have taken over recently as CAD drivers, he said. "The main factor has likely been the strength in the US dollar, which has benefitted from safe-haven flows as the Ukraine war broke out as well as a sharp rise in US yields."

MNI Ottawa Bureau | +1 613-314-9647 |
MNI Ottawa Bureau | +1 613-314-9647 |

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