The Bank of Canada doesn’t target the exchange rate. But it has in the past year set down some fairly significant goalposts. At its last meeting, in January, a key reason why Governor Poloz didn’t cut was how far and fast the currency had weakened.
However, last Spring, Poloz also expressed some concern that, in rising above 80 cents, the Canadian dollar had strengthened too much. The C$ currently stands in the middle of the 70-80 goalposts.
However, if it continues to strengthen as oil prices recover Governor Poloz may feel the need to verbally push back and keep the loonie on the weak side of fair value, making sure that the encouraging signs we have seen recently from non-energy exports continue.
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