IB Economics SL IA: International Economics (7점)

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본 문서는 2019년에 작성한 International Economics IA 과제입니다.
Exchange Rates에 대한 에세이입니다.
해당 주제에 관심있으신 분들은 참고하셔서 작성하면 좋을 것 같습니다 🙂
파이널 7점 받았습니다!

 

[본문내용]

Recent Canadian Dollar Weakness Will Support Economy, Lane Says

The Canadian economy’s underperformance relative to the U.S. of late has put downward pressure on the country’s currency, but that should help the economy through a temporary slowdown, a Bank of Canada official said.

In a speech on how Canada manages its foreign exchange reserves, Deputy Governor Tim Lane touted the benefits of the country’s floating exchange rate policy that has allowed it to quickly adjust to shocks and keep reserves at low levels.

Lane made a few observations about the “recent experience” of the Canadian dollar, which has weakened against the U.S. dollar because of the relative performance of the two economies.

“To a certain extent, movements in the Canadian dollar reflect the comparative strengths of the Canadian and U.S. economies — which are linked, in turn, to expectations for each country’s monetary policy path,” Lane said, according to prepared remarks he will deliver Wednesday at the Peterson Institute for International Economics in Washington.

The U.S. economy has been benefiting from fiscal stimulus, prompting the Federal Reserve to bring rates higher, Lane said. In Canada, U.S. trade policies have been holding back business investment below levels that would be expected given economic fundamentals. The country is also facing lower oil prices, and softer housing investment and consumption that has resulted in a “temporary” slowing of growth.

“This combination of factors has been putting downward pressure on the Canadian dollar,” Lane said. “The lower Canadian dollar, in turn, will help support the economy through this period.”

Lane’s speech went over the history of Canada’s reserve management practices, pointing out the country hasn’t intervened to stabilize the Canadian dollar in over two decades, even though the option is always there if necessary.

“Canada holds foreign exchange reserves as a precaution against extreme events,” Lane said. “Even though Canada has had no history of such events, we know from international experience that they are possible…

 

  • 총 페이지수: 4 pages
  • 과목명: Economics
  • 주제: International Economics IA – Exchange Rates
  • The file is in PDF format.
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IB Economics SL IA: International Economics (7점)

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