Article by Currency Information and Research

Basic Overview of the Canadian Dollar

CANADIAN DOLLAR...A POWERFUL CURRENCY IN WORLD

In economics, currency refers to a generally accepted medium of exchange. These are usually in the form of coins and banknotes of a particular government and reflect the physical aspects of a nation’s money supply. The general course of a particular currency of a country varies in duration and amplitude so it is probably impossible to predict the future price of a country’s currency. However, certain models are designed for the purpose of forecasting the currency rate.

One of the most powerful currencies in the world is the Canadian currency. Canada has an extensive history with regards to its currency. The current currency of Canada is the Canadian dollar. In 1841,canada introduced the Canadian pound which was used until 1858. From 1858 the currency was switched to the Canadian dollar which is still used to this day. According to a 2007 survey, it is the 7th most traded currency in the world.

The Canadian dollar is the main currency of Canada. However,  a number of central banks from various countries keep it as a reserve currency and it is considered a benchmark currency for these countries. It plays a major role in the U.S. economy .It is used as a regional reserve currency for the banking in UK, France, Netherland and a few Caribbean countries. All of these countries possess powerful economies. The economy of the USA is the world’s largest national economy which has maintained an overall balanced growth rate. Considering the economy of UK ,France and Netherlands these are the world’s 6th ,5th  and 13th largest economies as measured by nominal GDP(Gross Domestic Rate).

Canada is currently moving along with the USA. As mentioned the Canadian currency is very strong so the price of CAD will keep rising and making the USA currency weaker in comparison. Although  USD has regained some of its value the benefit has been taken by the CAD in the global market. The Canadian dollar is among the top 10 investment currencies in the world. The Bank of Canada currently lists the Canadian dollar equal to 0.979816 USD. However, this is the present condition of the CAD and an accurate prediction about its future is not completely possible. Nevertheless we can give a brief overview about the future outlook of the Canadian currency. Since 2002,the price of the Canadian dollar has been increasing continuously and its value has increased immensely in the foreign exchange market. The Canadian dollar is gaining its popularity day by day and its position is becoming more and more prominent,  both in the terms of daily turnover in the global currency markets and also in the central banks where it has been kept as a reserve currency. Thus we can say the future horizons of the Canadian dollar are much higher as compared to its present position, but as mentioned before the fluctuations in the global currencies are mostly unpredictable. Considering the Canadian Dollar as an investment currency, it is one of the best options for an investor possibly because Canada has a large and relatively stable economy with good interest rates, but one thing that should be kept in mind is that its rates are usually coupled with USD because of the great economic interactions between the two countries. Before investing, two things are necessary to be understood, one is the current economic situation and second is the future growth rate predictions.

Currently the CAD fulfills both of these features reasonably well.

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Modified:12/30/2011
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