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  • Nov 15th, 2010 7:11 pm
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Feb 15, 2008
26318 posts
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Calgary

BoC buying USD$

Just listening to howestreet.com this evening, at ~11:30, David Skarica claims that the Bank of Canada has tripled its holdings of US dollars in the past 9 months, in an attempt to suppress the CAD$:

http://www.howestreet.com/index.php?pl= ... layer/1838

Anyone know anything about this? Is the Bank of Canada selling out Canada and Canadians by buying up increasingly worthless US dollars?
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Deal Fanatic
Jul 1, 2007
8514 posts
1668 upvotes
Every central bank in the world buys and sells $USD. It's the world's primary reserve currency. The BoC's focus isn't on manipulating currency, it's on maintaining interest rate policy. Perhaps some situation arose though that did require the BoC to step in and "prop down" the loonie (maybe there was a large transaction in which a company or government needed to buy $CAD, perhaps to buy our exports, and the BoC facilitated it to avoid a sudden surge in the loonie).
Deal Addict
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Jun 28, 2007
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Thalo wrote: Every central bank in the world buys and sells $USD. It's the world's primary reserve currency. The BoC's focus isn't on manipulating currency, it's on maintaining interest rate policy. Perhaps some situation arose though that did require the BoC to step in and "prop down" the loonie (maybe there was a large transaction in which a company or government needed to buy $CAD, perhaps to buy our exports, and the BoC facilitated it to avoid a sudden surge in the loonie).

..agreed - there's no conspiracy here - the BoC mandate is price stability in Canada not currency manipulation. Buying and selling USD is part of everyday transactions and it ebbs and flows depending on capital market developments.

PS: the BoC may not have to do much in the way of bringing the C$ down - when risk aversion rises in the market as it did over the last few days with the Ireland debt crisis, the loonie tends to get hit by the tidal wave of flows to the USD.
Sr. Member
Mar 19, 2010
918 posts
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Markham
Mark77 wrote: Is the Bank of Canada selling out Canada and Canadians by buying up increasingly worthless US dollars?
You will not be saying that when the Canadian Dollar hits .70 US, in a couple of years.

:)

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