Weaker loonie no cure for manufacturers
10:11 AM, E.T. | October 5, 2011Canadian
With global uncertainty on the rise, investors have been piling into safe havens such as Treasuries and the U.S. dollar -- pushing the loonie below parity. Benjamin Reitzes, senior economist at BMO Capital Markets, tells BNN a weaker loonie will provide minimal relief to manufacturers dealing with reduced U.S. demand.
“Considering what is going on in the world and the uncertainty and the collapse in confidence in the U.S. and Europe, a weaker dollar is only going to cushion the blow,” he tells BNN. “When demand falls off, the dollar helps a little bit on the competitiveness side, but if the orders aren’t coming in…then it doesn’t help Canadian manufacturers.”
Reitzes says he doesn’t expect the Bank of Canada to raise rates until 2013, which will keep the loonie below parity until then.