I'm an idiot when it comes to economics- why does a strong Canadian dollar = a weak US dollar?

[Clintonista2]

Anyone care to explain?

[Hissyspit]

1. Strong against the U.S. dollar.

Canada's economy is not as big, is the short answer, so if our economy has currency of nearly equal value, it means something is amiss in our economy.

I think.

[TahitiNut]

2. Canada sells the US natural gas and oil.

When the US dollar goes down vs. the Canadian dollar ... those items cost more (in US dollars).

That's just a small example ... and that's $billions.

[countmyvote4real]

3. It's another indicator of how far the US dollar has fallen in the crapper.

It's not exclusive to Canadian currency.

[Clintonista2]

6. Ooooh, I thought that there was a direct correlation

thanks for clearing that up :)

[skids]

8. Yeah, oil at $80+, gold at a 27 year high...

...it isn't just the Canadian dollar, it's our dollar that sucks. The Canadian dollar does get people's attention easier, though.

[Double T]

4. Other major currencies are STRONG; it is the US Dollar that is weak and falling off.

Since most of what we buy comes from or is made somewhere else, we're going to be paying more and receiving less.

[L. Coyote]

5. Because it is a value comparison.

[WCGreen]

7. They are doing what they can do devalue the dollar to make

products going out to countries around the world more competative...

For thirty-five years, ever since Nixon took us off the Gold Standard back in 1972-4, other counries have been devaluing their currencies in order to flood the American Economy with cheap goods...

Now, the economies are sufficiently dynamic so they can stand stronger currency and afford American Exports...

It's a very long term view of trade...

[Warren Stupidity]

9. Perhaps for not for much longer, all currencies tend to be

valued relative to the dollar.

"Dollar hegemony is a term coined by Henry C.K. Liu to describe the US dollar in the global economy. Liu popularized the term in a widely circulated and quoted article "Dollar Hegemony has to go" in Asia Times, April 11, 2002. The article was quoted by William Clark <1> in January 2003, Immanuel Wallerstein of the Fernand Braudel Center on June 1, 2003 <2>, Greg Moses <3>, James Robertson in April 2004 <4> and subsequently by many others.

The term describes a geopolitical phenomenon of the 1990s in which the U.S. dollar, a fiat currency, became the primary reserve currency internationally. Three developments allowed dollar hegemony to emerge over a span of two decades. The Bretton Woods regime established in 1945 a fixed exchange rate regime based on a gold-backed dollar. It did not view cross-border flow of funds necessary or desirable for promoting trade or economic development. In 1971, President Nixon abandoned the Bretton Woods regime and suspended the dollar's peg to gold as U.S. fiscal deficits from overseas spending caused a massive drain in U.S. gold holdings. The second development was the denomination of oil in dollars after the 1973 Middle East oil crisis. The third development was the emergence of deregulated global financial markets after the Cold War that made cross-border flow of funds routine. A general relaxation of capital and foreign exchange control in the context of free-floating exchange rates made speculative attacks on the exchange rates of currencies a regular occurrence. These three developments permitted the emergence of dollar hegemony in the 1990s. All central banks have since been forced to hold more dollar reserves than they otherwise need to ward off sudden speculative attacks on their currencies in financial markets. Thus "dollar hegemony" prevents the exporting nations from spending domestically the dollars they earn from the U.S. trade deficit and forces them to finance the U.S. capital account surplus, thus shipping real wealth to the U.S. in exchange for the privilege of financing U.S. debt to further develop the U.S. economy.

It should be noted that most of the above paragraph describes a controversial point of view. However, it is undisputed that the dollar is the most important reserve currency in the world."
http://en.wikipedia.org/wiki/Dollar_hegemony

We are in the full unraveling of the system of the world economy established after WWII. With the dollar becoming unreliable as a reserve currency, the stability re-achieved in the 90's is collapsing, the resource wars are furthering the destabilization, and the US economic situation is widely viewed as unsustainable, although nobody is quite sure what will happen as it decays.

[Gman]

10. Let me put it this way

the last time I was in Canada, when I got billed by American Express, I only paid in US dollars about 2/3 or 66% of what I was billed in Canadian dollars. I was billed a little over $100 Canadian for a wonderful steak dinner in Windsor. I paid American Express something like $68 American for that meal.

With a weak US dollar, I would have paid probably closer now to $99 US for that dinner today.