- BMO's Doug Porter says strong Canadian dollar gives many businesses further opportunity to increase their capital expenditures
TORONTO, April 6 /CNW/ - The Canadian dollar reached parity today with its U.S. counterpart, signalling a further increase in the purchasing power of Canadian consumers but a deeper challenge for Canadian producers, according to Douglas Porter, Deputy Chief Economist, BMO Capital Markets.
"The strong dollar will keep a lid on imported goods prices, and could lead to some price cutting on selected goods," said Mr. Porter. "More broadly, it will help restrain inflation, and could slow the rise in interest rates later this year. The further the Canadian dollar rises, the less the Bank of Canada will feel the need to boost its key lending rate."
Mr. Porter also noted while the strong Canadian dollar will put renewed strain on manufacturing, businesses have an opportunity to invest in their operations through imports, given the high dollar and the decision from the federal budget to eliminate import tariffs on industrial inputs and machinery used by manufacturers to make goods. "The strong dollar will make life difficult for the tourism industry, both by discouraging foreign visitors from coming to Canada - particularly U.S. tourists - dimming the afterglow from the Olympics, and by encouraging Canadians to travel outside of the country with their high-powered loonies."
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SOURCE BMO Financial Group
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