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OTTAWA - Weakness in the Canadian dollar is the most important factor in helping Canada adjust to low commodity prices, Bank of Canada Governor Stephen Poloz said in a speech on Thursday, pledging to steer monetary policy independently of the U.S. Federal Reserve.
He made his remarks in a speech in which he welcomed last month's Fed rate hike as a sign of U.S. recovery and said divergence of monetary policy globally should be expected.
The Canadian dollar is trading at 12-year lows, pulled down by a prolonged slump in commodity prices that Poloz said represented a very complex shock for policymakers.
"The most important facilitator of adjustment in these circumstances is a flexible exchange rate ... the depreciation of our currency is a natural part of the process," he said in the prepared text of a speech.
"It is not a coincidence that the Canadian dollar is about where it was back in 2003 and 2004; oil prices are also about where they were back then."
Reporting by David Ljunggren and Randall Palmer