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As a member of the International Monetary Fund (IMF), Canada’s decision to float the Canadian dollar was at odds with its commitment to the Fund to maintain a fixed exchange rate within the Bretton Woods system. In this regard, in 1949 the Canadian authorities had established with the IMF a "par value” of US$0.9091 with a fluctuation band of ±1 per cent. The decision was also taken over the opposition of IMF staff who recommended more vigorous foreign exchange intervention or the imposition of controls on capital inflows (IMF 1950).79 There were also concerns that Canada had "gravely compromised and embarrassed” the IMF and had set a bad example for other "less responsible members” .
1950-62 | Views: 508 | Added by: gogoshvab | Date: 2010-02-19


 
By mid-1950, the depreciation of the Canadian dollar against its U.S. counterpart the previous year, combined with rising commodity prices associated with the beginning of the Korean War in June 1950, had significantly strengthened Canada’s trade balance with the United States. At the same time, the economic recovery in Europe, aided by the Marshall Plan, which provided European countries with convertible U.S. dollars, boosted Canadian exports. There were also strong inflows of direct investment into Canada. Short-term capital inflows also increased sharply, particularly through the third quarter of 1950, as speculation regarding a Canadian-dollar revaluation intensified.
1950-62 | Views: 1087 | Added by: gogoshvab | Date: 2010-02-19