By Leah Schnurr
TORONTO, Jan 14 (Reuters) - Canada’s manufacturing sector is happy about the weakening of the country’s currency, which presents “remarkable opportunities,” the government’s junior finance minister said on Tuesday, suggesting Ottawa is not upset by the slide.
“I think ... the manufacturing sector (is) quite pleased that we have a dollar that the value is down from what it was a number of months ago,” Kevin Sorenson, secretary of state for finance, told reporters after giving a speech in Toronto.
His comments were similar to those made earlier this month by the finance and industry ministers, suggesting the Conservative government is not overly worried by the Canadian dollar’s recent steep fall.
The Canadian dollar lost ground every day last week and touched a more than four-year low against the greenback on Friday after news of heavy job losses in December. It closed slightly higher on Monday at C$1.0846 to the greenback, or 92.20 U.S. cents.
A strong currency in the years following the global financial crisis has often been cited as a problem for the country’s export sector, which does business primarily with the United States.
“I would say that with the dollar being low there is remarkable opportunity,” Sorenson said. “We’re an exporting country and as you know by far the majority of everything we manufacture here and everything we grow here we export and so there’s opportunity.”
Canadian authorities do not intervene in the foreign exchange market except in extreme circumstances in which volatility is believed to be destabilizing the financial system.
“Really, where the dollar is positioned, for us will mean very little. It will more be how can we keep taxes low, how can we continue to support this economy,” Sorenson said.
Asked on Friday about recent volatility in the currency, Industry Minister James Moore said the Canadian dollar has been trading within a steady range.
In an interview on Jan. 5, Finance Minister Jim Flaherty said that with the Canadian dollar trading near current levels “it’s good for manufacturing and we can still travel reasonably”.
In his speech, Sorenson, looking ahead to a federal budget that is expected to be presented in early February, said the government remains committed to introducing legislation requiring balanced budgets.
Only after the deficit is eliminated will it consider more tax cuts and other initiatives, he said.
“We have stated that we will come back to balanced budget legislation. ... that unless extraordinary measures come upon us like the downturn that we’ve seen in the past, that governments will operate within balanced budget legislation,” he later told reporters.
It was not clear whether the measures would be in the upcoming budget.
The promise of legislation requiring governments to run a surplus except in times of economic crisis was first made in a major policy speech on Oct. 16, along with a vow to freeze spending temporarily.
Canada is one of a handful of countries with a prized triple-A credit rating from leading agencies, and barring any major economic upsets the government looks set to make good on a promise to eliminate its small budget deficit before the next election in 2015.
The Conservatives ran up big deficits following the global financial crisis, amounting to 3.6 percent of gross domestic product in 2009-10.
The gap is currently at about 1 percent of GDP, but Sorenson warned that “an uncertain and fragile global economy” could still derail Ottawa’s plans.
Sorenson said Ottawa would freeze government operating spending for the 2014-15 and 2015-16 fiscal years and review the government’s corporate assets for items it could potentially sell.
Once the government is back in the black, he said it would consider further tax cuts, although he did not give details.
“That includes looking at further tax relief and new ways to provide support to businesses like yours, following the return to a balanced budget,” he said.