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Canadian Dollar Spikes in March
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The Canadian dollar soared more than a cent after an inflation report reduced expectations that there would be an interest-rate cut.
The loonie climbed after a report showed the inflation rate registered the steepest jump in a year and a half, making any rate cut less likely. The report came a day after the federal budget boosted spending.
The CPI increased to a 2-per-cent annual rate in February, Statistics Canada said Tuesday. The core inflation rate, which strips out the eight most volatile items in the index, rose to 2.4 per cent, a four-year high.
Because of the jump the central bank won't be reducing rates. Why does this increase the dollar? Well to put it in very basic terms, when you increase the interest rate, more people demand Canadian dollars. If you reduce the interest rate less people will demand Canadian dollars because our investments are worth less.
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econmod
Broker
/ Moderator
Mar 20, 2007, 12:34 PM
Post #1 of 1
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