BMO Chief Economist Predicts Canadian Dollar to Fall to 90 Cents U.S.

[pierrelebel]

BMO Chief Economist Predicts Canadian Dollar to Stay Close to Parity Through 2013, but Fall to 90 Cents U.S. in Five Years - In the short term, slightly softer Canadian dollar to stay close to parity as improved U.S. momentum spreads north -

Now is the time for Canadian businesses to leverage current strength of the loonie

TORONTO, ONTARIO--(Marketwired - April 18, 2013) - BMO Chief Economist Doug Porter is predicting that, while the weakened loonie should stay close to parity for most of this year, the next five years will see the Canadian dollar soften to 90 cents U.S.

"The Canadian dollar is hovering at 97.5 cents U.S., but has dropped over five per cent in the past six months," said Mr. Porter. "There are a number of factors at play with the loonie's slide, ranging from generalized U.S. dollar firming, to softer commodity prices, to a widening trade gap, to a less hawkish Bank of Canada."

Mr. Porter noted that in spite of its recent sluggish performance, the loonie's prospects remain generally positive for 2014, as Canada remains attractive internationally and the Bank of Canada is expected to tighten policy ahead of the Federal Reserve.

Steve Murphy, Head of Commercial Banking, BMO Bank of Montreal, noted that now is the time for businesses to take advantage of the dollar's strength.

"Given its current strength, and the possibility of it weakening over the medium term, now is the time for businesses to leverage the strength of the loonie," said Mr. Murphy. "For those businesses looking to upgrade their processes, technology, and equipment to boost their productivity, the high value of the Canadian dollar can provide them with additional purchasing power when importing this equipment and purchasing supplies and inventory from the global market."

Mr. Murphy added that businesses should consider taking advantage of BMO's Online Banking for Business platform that will assist them in making important foreign exchange transactions effectively.

Online Banking for Business provides customers with a comprehensive view of their financial information, including payments products and banking services in an easy-to-use internet environment. Customers from small businesses to the very large capital market corporations are able to manage all aspects of their treasury needs - from global cash management to foreign exchange services to investments, loans, and trade finance - all from a user-friendly customizable home page.

For more information on BMO cash flow management tools and products please visit http://www.bmo.com/home/commercial or contact your BMO Bank of Montreal representative.

[inuk_the_polar_bear]

I have always thought the Loonie was over valued. Mind you, the Cdn economy has always been one of the safest ones to invest in. Our gov't system is one of the most stable in the world. The ability to tax to pay bills is envied. We are very rich.

Gold is dropping, oil is dropping, bottom is gone from natural gas, pulp and paper is dead. The world is learning to feed itself. All commodities that we are strong in.

Alberta is going from a "have" province to a "have not". WTI may trade at $86, but, Alberta bitumen trades at $56. That is not sustainable for industry plus tax and royalty collection. Ontario should be on the rise as the industrial and head office capital of Canada.

Power shifts from the west to the east.