Posted by: Tony Carson | 20 September, 2007

The loonie-$-euro

Notes on the loonie, the dollar and the euro, from the Globe and Mails: Loonie catches greenback:

The Canadian currency’s 60-per-cent surge over the past five years “represents its most rapid climb on record,” said Jeff Rubin, chief economist for CIBC World Market.

The Canadian dollar has seen some steep ebbs and flows in its history. In 1864, the greenback traded at less than 36 cents (Canadian), an all-time low for the U.S. currency. In 2002, by contrast, the loonie traded as low as 62 cents.

This year alone, the Canadian dollar has soared 16 per cent against the greenback, the strongest performance of any G-10 country.

The U.S. dollar meanwhile fell to a new low against the euro on Thursday as the European currency breached $1.40 for the first time since its debut in 1999.

Breaking the $1.40 barrier for the euro has long been seen as a key turning point in solidifying the euro’s position in global currency markets, providing more impetus for it to be the reserve currency of choice — a position long held by the now-weakening U.S. dollar.

The greenback also fell against other currencies, dipping against the British pound to $2.0082 compared with $2.0025 late Wednesday. It also slipped against the Japanese currency to 114.96 yen from 116.09 late Wednesday.

“We expect more U.S. dollar weakness is looming,” Bank of Nova Scotia said in a repo

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Responses

  1. Currency fluctuations such as we see between the U.S. and the euro and among all countries or monetary unions around the world are wasteful, risky, and unnecessary.
    What is needed is a Single Global Currency, managed by a Global Central Bank within a Global Monetary Union. (See http://www.singleglobalcurrency.org)
    If the euro can be used successfully by 13 nations, soon to be 15, and later 22 nations, why not move to a currency to be used by all 191 members of the United Nations for international transactions AND for internal transactions such as the payment of taxes. Led by the example of Europe, regional monetary unions are being created and expanded around the world. One possibility is a North American monetary Union, but that will not happen until the U.S. Federal Reserve shows a willingness to include the Canadians and Mexicans at the monetary policy decisionmaking tables – and that will happen when the custodians of the US dollar finally see that they need partners in order to avoid or slow down the pre-eminence of the euro.
    However, as good as such regional unions may be, they still exist in an expensive multi-currency world. Their benefits will be dwarfed by the benefits of a Single Global Currency.
    The implementation of a Single Global Currency will save the world approximately $400 billion in foreign exchange transaction costs, and will eliminate currency crises and balance of payment problems and eliminate all the currency fluctuations which bedevil our globalizing world. Also, a Single Global Currency would increase the values of assets in countries where currency risk is presently high, and the citizens of those countries would be less likely to send their money to safer financial centers.
    The goal of the Single Global Currency Assn. is a Single Global Currency by the year 2024, which is only 17 years away. Daunting as that goal may seem, please remember that in 1985, when the euro was still 17 years away from the pockets of Europeans, the prospects for ever abandoning the deutschmark, franc and guilder were low. Also, the Berlin wall was still standing and the Soviet Union loomed large.
    We need to start researching and planning now for a Single Global Currency to be managed by a Global Central Bank within a Global Monetary Union.

  2. […] the euro, how about one world currency Morrison Bonpasse wrote in to comment on The loonie-$-euro, where he advocates a single world currency. It is an intriguing idea, well […]


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