May 12, 2022 The perfect storm Remarks Toni Gravelle Association des économistes québécois Montréal, Quebec Deputy Governor Toni Gravelle discusses the commodity price shock and its implications for the Canadian economy and monetary policy. Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Coronavirus disease (COVID-19), Domestic demand and components, Exchange rates, Expectations, Inflation and prices, Inflation: costs and benefits, Interest rates, International topics, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Recent economic and financial developments
May 12, 2022 How commodity prices affect our economy Speech summary Toni Gravelle Association des économistes québécois Montréal, Quebec Deputy Governor Toni Gravelle talks about the spike in commodity prices over the past two years, the impact on inflation and how the Bank of Canada is responding. Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Coronavirus disease (COVID-19), Domestic demand and components, Exchange rates, Expectations, Inflation and prices, Inflation: costs and benefits, Interest rates, International topics, Labour markets, Monetary policy, Monetary policy and uncertainty, Monetary policy communications, Recent economic and financial developments
Exports and the Exchange Rate: A General Equilibrium Perspective Staff Working Paper 2022-18 Patrick Alexander, Abeer Reza How do a country’s exports change when its currency depreciates? Does it matter which forces drive the exchange rate deprecation in the first place? We find that this relationship varies greatly depending on what drives exchange rate movements, and we conclude that the direct relationship between the exchange rate and exports is weak for Canada. Content Type(s): Staff research, Staff working papers Topic(s): Balance of payments and components, Business fluctuations and cycles, Exchange rate regimes, Exchange rates, International topics, Monetary policy transmission, Trade integration JEL Code(s): F, F3, F31, F32, F33, F4, F41
Real Exchange Rate Decompositions Staff Discussion Paper 2022-6 Bruno Feunou, Jean-Sébastien Fontaine, Ingomar Krohn We break down the exchange rate based on an explicit link between fixed income and currency markets. We isolate a foreign exchange risk premium and show it is the main driver of the exchange rate between the Canadian and US dollars, especially on monetary policy and macroeconomic news announcement days. Content Type(s): Staff research, Staff discussion papers Topic(s): Asset pricing, Exchange rates, International financial markets, Monetary policy transmission JEL Code(s): E, E4, E43, F, F3, F31, G, G1, G12
Foreign Exchange Fixings and Returns Around the Clock Staff Working Paper 2021-48 Ingomar Krohn, Philippe Mueller, Paul Whelan We document a new empirical finding in the foreign exchange market: currency returns show systematic reversals around the benchmark fixings. Specifically, the US dollar, on average, appreciates in the hours before fixes and depreciates after fixes. Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Financial markets, Market structure and pricing JEL Code(s): F, F3, F31, G, G1, G15
Tariffs and the Exchange Rate: Evidence from Twitter Staff Working Paper 2021-36 Dmitry Matveev, Francisco Ruge-Murcia Do tariffs affect exchange rates? We look at President Trump’s tweets during talks on the North American Free Trade Agreement and find that anticipation of higher tariffs on imports from Canada and Mexico led to an appreciation of the US dollar relative to Canadian and Mexican currency. Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Trade integration JEL Code(s): F, F1, F13, F3, F31
October 1, 2020 Background information on foreign exchange rates Learn about the publication of, and calculation methodology for, the foreign exchange (FX) rate data on the Bank of Canada’s website. Content Type(s): Background materials Topic(s): Exchange rates
August 13, 2020 Understanding exchange rates The foreign exchange market determines how much the Canadian dollar is worth. At the Bank of Canada, we very rarely intervene to support its value. Content Type(s): Explainers Topic(s): Exchange rates
Trade Flows and Exchange Rates: Importers, Exporters and Products Staff Working Paper 2019-41 Michael Devereux, Wei Dong, Ben Tomlin Using highly disaggregated transaction-level trade data, we document the importance of new firm-level trade partner relationships and the addition of new products to existing relationships in driving aggregate trade flows. Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, Firm dynamics, International topics JEL Code(s): F, F1, F4
Exchange Rates, Retailers, and Importing: Theory and Firm-Level Evidence Staff Working Paper 2019-34 Alex Chernoff, Patrick Alexander We develop a model with firm heterogeneity in importing and cross-border shopping among consumers. Exchange-rate appreciations lower the cost of imported goods, but also lead to more cross-border shopping; hence, the net impact on aggregate retail prices and sales is ambiguous. Content Type(s): Staff research, Staff working papers Topic(s): Exchange rates, International topics, Service sector JEL Code(s): F, F1, F10, F14, L, L8, L81