CALGARY (Reuters) - The strong Canadian dollar has been a drag on the Canadian economy for the last few years, but the Bank of Canada has no target for the currency’s level and focuses instead on inflation targets, central bank Deputy Governor Timothy Lane said on Tuesday.
“The Canadian dollar is a factor that we look at very closely in relation to the economic outlook for Canada and for the last few years has been at a level that represents a drag on the Canadian economy, particularly with regards to our export performance,” Lane told a business audience after a speech in Calgary.
“But when we look at the exchange rate in relation to making monetary policy, we view that through the prism of our inflation target ... we don’t have a target for the level of the exchange rate, but rather we factor it in.”
Canada’s currency soared to a 13-month high this month on hopes that new stimulus measures by U.S. and European central banks will revive global growth.
The Bank of Canada has said repeatedly the currency’s strength has dampened economic growth by making it tougher for exporters to stay competitive.
In its most recent policy decision on September 5, the central forecast Canadian exports will remain below their pre-recession peak until the beginning of 2014, partly because of “the persistent strength of the Canadian dollar”.
Lane also noted that when the central bank makes monetary policy, it does so for the broader economy and not any specific sector or region.
Writing by Andrea Hopkins and Jeffrey Hodgson; Editing by Peter Galloway