4 Min Read
VANCOUVER, British Columbia (Reuters) - Canadian Finance Minister Jim Flaherty, who warned this month that steps could be taken to curb a sharp rise in the Canadian dollar, said on Sunday he was pleased with the currency's recent stability.
Flaherty said he had been hearing complaints from businesses that volatility in the Canadian dollar was making it difficult for them at a time when the country was already struggling to revive its economy.
"We've seen some relative stability of late, and that's good for our businesses in Canada," Flaherty told a media briefing in Vancouver ahead of a speech to a meeting of international tax and accounting experts.
The Canadian dollar rallied more than 20 percent from a four-year low in March to its 2009 high in August, when comments from Flaherty that steps could be taken to curb its rise helped reverse the trend.
The currency was trading at C$1.0956 or 91.27 U.S. cents, during the overnight session in Asia, weakening from C$1.0949, or 91.33 U.S. cents, just before Flaherty's latest comment.
While the Canadian dollar's rise has been linked to higher oil prices and an improved outlook for the global economy, there have been complaints that it was also being pushed along by speculators.
The Bank of Canada has also expressed concern that persistent Canadian dollar strength could threaten the economic recovery by hampering the country's exporters.
Flaherty, who was speaking in Vancouver in advance of the Sept 4-5 meeting of G20 finance ministers, said he believed it was too soon for Canada or other countries to back away from the economic stimulus packages they have enacted.
Economists have said that while the world economy is showing signs of improving, the G20 leaders will have to show that they can withdraw the stimulus used to spur that recovery in an orderly way without derailing it.
"I share the view that we are seeing stability in the financial systems of late, but it would be a mistake to assume that we have entrenched economic growth," Flaherty told reporters in Vancouver.
Flaherty said the need for continued emphasis on stimulus was particularly true for G20 countries.
"There will be a time when we can talk about how we rebalance the system later on. We can have early discussions on that subject, but I would not want to move away from the emphasis now on implementing the stimulus packages," he said.
Canada would also keep up the pressure on other countries on the need to improve global financial oversight, using Canada as and example, Flaherty indicated.
Flaherty and other Canadian officials who once winced at suggestions their banking system was "boring" now embrace the word to describe how its banks largely avoided the hammering that hit many international rivals during the current global economic storm.
"The Canadian system clearly works, and works well," Flaherty said in prepared remarks to be delivered to the 63 Congress of the International Fiscal Association, which is meeting on Canada's Pacific coast.
He noted Canada's financial system had not seen the proliferation of sub-prime mortgage products that triggered the U.S. meltdown and that no Canadian banks have required an injection of public funds.
Despite hailing the Canadian system as one for the world to follow, Flaherty reiterated his call for Canada to adopt a single securities regulator - replacing the current system that puts securities regulation in the hands of the country's provinces.
Ottawa's plan has drawn some provincial resistance, especially in Quebec.
Flaherty said the proposed Canadian securities regulator will have a "financial stability mandate" just as the country has for its existing regulatory systems.
Editing by Jeffrey Hodgson.