Flaherty says volatility more worrying than loonie's level

Wed Sep 14, 2011 2:03pm EDT
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OSHAWA, Ontario (Reuters) - Canadian businesses are more concerned with the volatility of the country's currency than its actual level, Finance Minister Jim Flaherty said on Wednesday.

Flaherty also told reporters that he expected modest economic growth in Canada and that the country should avoid a double-dip recession.

"What I hear from Canadian business...is what they fear is volatility in the currency, that they can deal with a currency that's trading within a certain range," he said. "So we watch that volatility, and that is to be avoided."

Asked if Canada might intervene in markets to depress the value of its currency, he said: "I don't anticipate that happening - we're not seeing that kind of volatility in the market...There's no intention of doing that."

Flaherty added that history had shown that such intervention is limited in its effectiveness.

Canada's economy shrank slightly in the second quarter, and Bank of Nova Scotia said this week the country might already be in another recession, but Flaherty said that is not what he was seeing.

"Canada's economy among the advanced economies is performing relatively well, but we are seeing quite modest growth and we have to be conscious always of the danger of shocks to our economy from outside, from the troubles in the European Union or weakness in the U.S. economy," he said.

"The numbers we have seen from the economists indicate that we will have continued modest growth in the Canadian economy."

(Reporting by Trish Nixon; writing by Randall Palmer; editing by Peter Galloway)

<p>Canada's Finance Minister Jim Flaherty prepares to testify before the House of Commons finance committee on Parliament Hill in Ottawa August 19, 2011. REUTERS/Chris Wattie</p>