Understanding the Volatility of the Canadian Exchange Rate

Summary:
Page Title:Understanding the Volatility of the Canadian Exchange Rate – C.D. Howe Institute
Article Title:Understanding the Volatility of the Canadian Exchange Rate
URL:https://cdhowe.org/publication/understanding-volatility-canadian-exchange-rate/
Published Date:February 8, 2018
Accessed Date:February 17, 2025

Contrary to popular belief, commodity prices are not the best predictor of the future exchange rate for the Canadian dollar, according to new research from the C.D. Howe Institute. In “Understanding the Volatility of the Canadian Exchange Rate”, authors Martin Eichenbaum, Benjamin K. Johannsen, and Sergio Rebelo find the current real exchange rate, (ie., minus inflation) is more useful than commodity prices for forecasting changes in the Canada/US nominal exchange rate. 

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