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October 2, 2011

Currencies Outlook: Canadian Dollar

I also like the Canadian dollar. Years ago, Canada put in place some deep structural changes to help deal with their problems of deficits and big government. While it’s certainly not a free-market utopia up there, I think they’ve done a lot of good things, and I think the Canadian dollar is going to rise.

I agree that Canadian rates are too low, and it’s unfortunate that they’re reluctant to raise them. They’re trying to keep their currency, which has been above parity all year with the US dollar – for the first time in generations – from moving too much higher. That is a foolish mistake that other countries have made, and if the intervention gets out of hand, the Canadian dollar could fall relative to the Aussie and New Zealand dollar. But I think that the Canadian outlook will evolve...they’ll learn. Look at Switzerland, for example: they have the strongest currency in the world right now, and their exports are booming!

I also understand that Canada is close to the US, and so their economy is going to be affected by a big downturn here. However, I expect a lot of that slack to be made up with greater exports to Asia, China in particular.”

Tickers: USDCAD forex and CurrencyShares Canadian Dollar Trust (NYSE:FXC)

Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.
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