OTTAWA (Reuters) - Companies and institutional investors who hedge their Canadian dollar exposure through major banks expect the currency to fall back under parity with the U.S. dollar in 2013, a Bank of Canada survey showed on Friday.
The central bank conducted the survey of banks that are active in Canadian foreign exchange hedging from June to August, a period when the Canadian dollar was largely weaker than the U.S. dollar.
It found the banks’ average estimate of their clients’ budgeted Canadian dollar rate for 2013 is C$1.0119 to the U.S. dollar, or 98.82 U.S. cents. The rate for 2012 is C$1.0075 per U.S. dollar, or 99.26 U.S. cents, the survey showed.
On Friday afternoon, the Canadian currency stood at C$0.9922 per U.S. dollar, or $1.0079.
“The Canadian dollar is largely anticipated to remain little changed over the next year with banks noting that most accounts do not expect the Canadian dollar to trade significantly outside a (US$)0.98-(US$)1.03 range,” the bank said.
“They noted that their customers felt little pressure to hedge due to expectations that the currency would remain steady, with clients choosing to wait for a more opportunistic level to hedge, within the anticipated range.”
The report added that as a result of that view, many corporate clients were choosing to cover exposures in the spot market, or hedge for less than one month.
Reporting by Randall Palmer, editing by Jeffrey Hodgson; editing by Andrew Hay