If The Canadian Dollar Keeps Rising Negative Interest Rates Are Coming To Canada – May 10, 2021,
The Canadian economy is heavily reliant on lower valued Loonie, the Canadian government can’t pay its bills without a lower-valued Loonie and a lot of the private sector manufacturers in Canada sell to the United States and they make Canada heir home primarily because of the lower corporate taxes as well as the expectation that the Loonie will remain low indefinitely.
The current positives for the Canadian economy that might delay the Bank of Canada going to negative interest rates, is the stupidity of Joe Biden. When Justin Trudeau became Prime Minister of Canada, I never in wildest thought that America could one up Canada and elect an economic buffoon like Joe Biden into the White House.
But America continues to surprise me and Joe Biden is the 46th U.S. President worst than Joe Biden is the potentiality that Kamala Harris might become President and she appears to be potentially more progressive than Joe Biden. All this equates to Justin Trudeau almost appearing to be a Conservative in comparison to Joe Biden at least from a market perspective and it’s likely that the Bank of Canada will have to step in and stop this rising Canadian dollar because the truth of the matter is the Canadian dollar is still viewed as a commodities dollar and if it becomes more expensive for Americans to import things, Americans will most likely spend less out of necessity.
So what I suspect is going to happen is that there will be a coordinated effort by central banks all over the world to debase their currencies to the U.S dollar. Because Canadians are in the most debt, I suspect the Bank of Canada will be one of the first to go into negative interest rates as it will appear to be a quick fix. It won’t be, but we’ll figure that out the hard way.
In the next few weeks, if the Canadian dollar continues to rise, you’ll start to read from the mainstream Canadian media about negative interest rates.
S&P/TSX composite edges higher in late-morning trading, loonie rises again | ca.finance.yahoo.com
Interesting times ahead!