The Canadian dollar resumed its weakening trend in 2000 and 2001, and touched an all-time low of US$0.6179 on 21 January 2002. Through much of this period, the U.S. currency rose against all major currencies, reaching multi-year highs, supported by large private capital flows in the United States owing to continued robust U.S. growth and further strong productivity gains. A decline in commodity prices in 2001, caused by an abrupt slowdown of the global economy, led by the United States, also undermined the Canadian currency. In addition, markets were temporarily roiled by the terrorist attacks in the United States on 11 September.
In this economically and politically uncertain environment, central banks around the world lowered interest rates to support demand and provide liquidity to markets. The Bank of Canada reduced short-term interest rates by 375 basis points through 2001 and early 2002.
Through 2002, the Canadian dollar stabilized and then began to recover as the global economy picked up and as the U.S. dollar started to weaken against other currencies. It appreciated sharply through 2003 and 2004, peaking at over US$0.85 in November 2004, a level not seen for thirteen years. This was a trough-to-peak appreciation of roughly 38 per cent in only two years. The Canadian dollar’s rise reflected a robust global economy, led by the United States and emerging Asian markets (particularly China), which boosted the prices of Canada’s commodity exports. As well, growing investor concerns about the widening U.S. current account deficit, undermined the U.S. unit against all major currencies. While the Canadian dollar settled back somewhat during the first half of 2005 as the U.S. dollar rallied modestly against all currencies, underpinned by rising U.S.-dollar interest rates, it began to strengthen again through the summer, supported by rising energy prices. Strengthening against all major currencies, the Canadian dollar touched a high of US$0.8630 on 30 September 2005. In late October, it was trading for the most part in a US$0.84–0.85 range, off its earlier highs as energy prices retreated.
(Bank of Canada, $20, 2004
The Canadian Journey series is the sixth note issue by the Bank of Canada. It features the same portraits and strong identifying colours that appeared on the previous series, but incorporates images that reflect Canadian values and achievements. The back of this note illustrates the theme of Canadian arts and culture with works by Canadian artist Bill Reid that feature Haida images.)
Canadian Dollar in Terms of the U.S. Dollar
Monthly averages (1970–2005)
A: 25 April 1974: Canadian-dollar recent high US$1.0443
B: 4 February 1986: US$0.6913
C: 4 November 1991: US$0.8934
D: 27 August 1998: US$0.6311
E: 21 January 2002: All-time Canadian-dollar low US$0.6179
F: 30 September 2005: US$0.8630
2. December 1971: Smithsonian Agreement
3. March 1973: Collapse of Bretton Woods system
4. 15 November 1976: Election of Parti Québécois in Quebec
5. 20 May 1980: Quebec Referendum
6. October 1980: National Energy Program introduced
7. September 1985: Plaza Accord
8. February 1987: Louvre Accord
9. 3 June 1987: Meach Lake Constitutional Accord
10. 26 June 1990: Ratification of Meach Lake Constitutional Accord fails
11. 26 October 1992: Defeat of Charlottetown Accord
12. December 1994: Mexican crisis begins.
13. 30 October 1995: Quebec Referendum
14. July 1997: Asian crisis begins.
15. 12 August 1998: Russian default crisis begins.
16. 11 September 2001: Terrorist attacks in the United States