Stay updated on Canadian immigration and Canadian economy news: Measured by the actual purchasing power of the Canadian dollar and the US dollar, the current exchange rate of the Canadian dollar is overvalued by 10%, according to recent calculations by the World Economics.
The World Price Index published monthly by the World Economics serves as a benchmark in US dollars, calculating whether each major currency is overvalued or undervalued by using a basket of goods and services. This calculation pertains to the currency values as of October.
Recently included in the assessment of the World Price Index, the Canadian dollar is currently hovering around slightly above 96 cents, down from nearly it’s equivalent to the US dollar at the end of last year and significantly higher than the over 70 cents level from ten years ago.
However, according to the latest World Price Index, the current exchange rate of the Canadian dollar is inflated, effectively translating to a purchasing power equivalent to approximately 87 cents. A contributing factor to the overvaluation of the Canadian dollar is its increasing reliance on crude oil exports. Although crude oil is a significant pillar of the Canadian economy, providing considerable support to the Canadian dollar, the inflated dollar undermines the competitive edge of Canadian manufacturing exports, making Canadian industrial products more expensive in the US and global markets.