Exchange rates
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Real Exchange Rate Decompositions
We break down the exchange rate based on an explicit link between fixed income and currency markets. We isolate a foreign exchange risk premium and show it is the main driver of the exchange rate between the Canadian and US dollars, especially on monetary policy and macroeconomic news announcement days. -
Foreign Exchange Fixings and Returns Around the Clock
We document a new empirical finding in the foreign exchange market: currency returns show systematic reversals around the benchmark fixings. Specifically, the US dollar, on average, appreciates in the hours before fixes and depreciates after fixes. -
Tariffs and the Exchange Rate: Evidence from Twitter
Do tariffs affect exchange rates? We look at President Trump’s tweets during talks on the North American Free Trade Agreement and find that anticipation of higher tariffs on imports from Canada and Mexico led to an appreciation of the US dollar relative to Canadian and Mexican currency. -
October 1, 2020
Background information on foreign exchange rates
Learn about the publication of, and calculation methodology for, the foreign exchange (FX) rate data on the Bank of Canada’s website. -
August 13, 2020
Understanding exchange rates
The foreign exchange market determines how much the Canadian dollar is worth. At the Bank of Canada, we very rarely intervene to support its value. -
Trade Flows and Exchange Rates: Importers, Exporters and Products
Using highly disaggregated transaction-level trade data, we document the importance of new firm-level trade partner relationships and the addition of new products to existing relationships in driving aggregate trade flows. -
Exchange Rates, Retailers, and Importing: Theory and Firm-Level Evidence
We develop a model with firm heterogeneity in importing and cross-border shopping among consumers. Exchange-rate appreciations lower the cost of imported goods, but also lead to more cross-border shopping; hence, the net impact on aggregate retail prices and sales is ambiguous. -
June 17, 2019
Flexible Exchange Rates, Commodity Prices and Price Stability
Deputy Governor Lawrence Schembri speaks before the Economics Society of Northern Alberta (ESNA). -
June 17, 2019
The merits of a floating exchange rate
Deputy Governor Lawrence Schembri explains how Canada’s monetary policy framework—inflation targeting underpinned by a flexible exchange rate—has proved to be the most durable in the post-war period.