CAD - Canadian Dollar

The dollar (currency code CAD) has been the currency of Canada since 1858. It is normally abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies. It is divided into 100 cents. The Canadian dollar is the monetary basis for the Canadian economy, with all coins minted by the Royal Canadian Mint and all banknotes printed by the Canadian Bank Note Company and BA International Inc on behalf of the Bank of Canada.

Independent Canadian dollar

The Province of Canada declared that all accounts would be kept in dollars and cents as of January 1, 1858, and ordered the issue of the first official Canadian coins in the same year. The colonies that came together in the Canadian Confederation progressively adopted a decimal system over the next few years. When New Brunswick adopted a dollar equivalent to the Canadian dollar (see New Brunswick dollar), Nova Scotia and Newfoundland did not adopt the same dollar (see Nova Scotian dollar and Newfoundland dollar). Nova Scotia retained its own currency until 1871, but Newfoundland issued its own currency until joining the Confederation in 1949.

Finally, the Federal Parliament passed the Uniform Currency Act in April 1871, tying up loose ends as to the currencies of the various provinces and replacing them with a common Canadian dollar. The gold standard was temporarily abandoned during World War I, and definitively abolished on April 10, 1933.

Prior to the establishment of the Bank of Canada in 1935, Canadian banknotes were issued primarily by chartered banks, with the federal government issuing banknotes in smaller denominations never to exceed five dollars.

Reserve currency

A number of central banks keep Canadian dollars as a reserve currency. The Canadian dollar is the seventh most heavily traded currency in the world and is considered to be a benchmark currency .

Terminology

Canadian English, like American English, uses the slang term "buck" for a dollar. Because of the appearance of the common loon on back of the dollar coin which replaced the dollar bill in 1987, the word "loonie" was adopted in Canadian parlance to distinguish the Canadian dollar from other currencies, as in "The loonie performed well today on currency markets." When the two-dollar coin was introduced in 1996, the derivative word "toonie" became the common word for it in Canadian English slang.

In French, the currency is also called le dollar; Canadian French slang terms include piastre or piasse (same as "buck," but the original word used in eighteenth-century French to translate "dollar") and huard (equivalent to "loonie"), since huard is French for "loon," the bird appearing on the coin. The French pronunciation cent (pronounced cenne, not like the word for hundred) is generally used for the subdivision; sou is another, informal term.

Value

Inflation in the value of the Canadian dollar has been fairly low since the 1990s, but had been severe for some decades before that.

Since 84.2% of Canada's export goes to the United States, and 56.7% of the import into Canada comes from the U.S., Canadians are mainly interested in the value of their currency against the United States dollar (USD).

Since setting an all-time low of US$0.6179 on January 21, 2002, the Canadian dollar rallied through 2003, 2004, 2005 and the first months of 2006. It reached US$0.85 on November 26, 2004, US$0.87 on December 13, 2005 and set a 28-year high of US$0.9111 during trading on May 9, 2006.

Although there was a great deal of domestic concern when the Canadian dollar was trading much lower than the U.S. dollar, there is also concern among exporters when the dollar appreciates quickly. The rapid rise in the value of the Canadian dollar increases the price of Canadian exports to the United States, which make up a large part of the economy. On the other hand, Canadian industry enjoys advantages from a rising dollar, primarily in that it is cheaper to purchase foreign material and businesses. It should be noted that the Bank of Canada has no specific target value for the Canadian dollar and has not intervened in FOREX markets since 1998. The Bank is of the position that market conditions should determine the worth of the Canadian dollar.