Canada’s foreign exchange market is set to explode in 2018 as the Canadian dollar strengthens and the federal government’s plan to boost exports is set in motion.
As part of a broader economic strategy to drive growth and jobs, Finance Minister Jim Flaherty announced Wednesday that he would introduce measures to boost the value of Canadian currency.
The measures would also see the federal treasury begin a process to convert Canadian dollars into U.S. dollars, a move that would put a strain on the value and liquidity of the currency.
Flaherty made the announcement after announcing a $1.5-billion stimulus package for the economy that includes $3.4 billion in tax cuts for businesses and individuals.
The announcement comes just two weeks after the country’s largest financial company, CIBC World Markets, announced it would slash its Canadian dollar holdings by up to $1 billion.
Flaillard’s announcement comes amid increasing calls in the market for the government to increase foreign exchange rates, which are already a major part of the economy.
The country’s foreign currency reserves, which fluctuate between about $4 billion and $6 billion, have been in a tailspin over the past year, and there’s also a concern about the federal fiscal plan.
While Flaherty’s announcement is expected to help stabilize the economy, it’s unclear how many Canadians will benefit from the move.
In recent weeks, the Toronto Stock Exchange has warned that foreign exchange prices could plunge as high as 30 per cent, which would be a huge blow to the Canadian economy.
The price of oil has surged over the last several weeks, and prices for Canadian crude are also rising sharply.
With files from The Canadian Press and The Associated Press