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Originally Posted by Fisherdan
Good post. It’s all speculative of course, but do you think that the BOC will be forced to cut rates (our economy seems to be tanking) while the US maintains? I’ve heard that our dollar might be “sacrificed” in this way.
On a side note… an interesting company I heard of: Terravest (TVK). They build storage and transportation units for LNG, as well as fertilizer, etc. Been growing and acquiring nonstop since their inception in 2014. With rates higher for longer, they might roll up more distressed businesses. They seem to be under the radar somewhat.
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It is entirely possible that BOC lowers rates before the Fed. That would have a very negative impact on the Canada/U.S. exchange rate. If you are going to need U.S. dollars any time soon, it would be prudent to get them now. Holding stock or cash in U.S. dollars is also a prudent hedge against devaluation of the Canadian dollar. If you live in Venezuela or Argentina you will wish you had converted most of your wealth to greenbacks many years ago. It we get another Liberal government that scenario is not out of the question here in Canada.
Even if BOC doesn't drop rates first, I really don't see the Canadian dollar getting stronger against any other major currencies. Our economic performance sucks VERY badly, see my previous posts on productivity, and the Liberal policies have made Canada next to un-investable. When you have to give Billions in subsidies to get anyone to setup a business here, you know you aren't a preferred location for investment.
We badly need a change of government, but even with one, it will take a few years to repair the massive damage that has already been done.