Panama uses the U.S. dollar (which is doing ok at the moment!) but what is happening to currency around the world lately?!

Blog by Terry Richmeier and Manzar Lari

Here at Casa de Montana Bed & Breakfast we are very fortunate to have guests from all over the world. Lately, we are hearing from our guest’s issues that they are facing in their country with the value of their money.
For example, in Canada their currency the “Canadian dollar” does not seem to be doing well. In fact, the Canadian dollar has reached an all-time low. In an article from “Financial Post” titled “Canadian dollar hits 11-year-low in its worst losing streak since 2013” they talk about this issue. Why has this happened? The Canadian dollar is in the midst of its worst losing streak in more than two years as global economic growth looks set to derail the country’s plan for an export-led recovery.

1The currency plunged to an 11-year low after Norway, another large oil exporter, unexpectedly cut interest rates and said it may ease monetary policy even further. Signs that economic growth in China, the world’s biggest commodity consumer, is slowing down have sent prices for everything from oil to copper plunging and prompted speculation demand won’t be quick to recover.

Will a weak Canadian dollar really lead to stronger exports? An article from Reuters http://blogs.reuters.com/macroscope/2015/09/09/will-a-weak-canadian-dollar-really-lead-to-stronger-exports/ seems to not think so:

Canada’s near two-year-long attempt to boost exports through a weaker currency so far has proved to be futile. The country’s policymakers had hoped a lower exchange rate would benefit exports and in turn propel the economy. On the face of it, that is not an odd assumption to make as a weaker Canadian dollar should make the country’s exports relatively cheaper – and therefore more attractive. But a close look at the historic trend of exports and currency movement, as well as Reuter’s polls, suggests policymakers might be indulging in a pointless exercise, especially when the price of oil – a major Canadian export – has fallen so sharply.
The evidence shows that Canada’s export performance, and not just of crude oil, has been good even during periods when the dollar was strong.
A weaker currency, in turn, should bolster domestic demand by making it more expensive for people to buy imported products or even vacation abroad.

The Worst Performing Currencies at Year-End 2015 Worldwide (according to investopedia.com)

2As the U.S. economy recovers, the dollar has strengthened, making it one of the best performers over the last year. This is how other world currencies have fared vs. the dollar.
The Russian Ruble was hit hard in 2014, losing nearly 40% of its value following economic sanctions by the West and low oil prices. So far, in 2015, the ruble itself has remained fairly unchanged, however the ripple effect to former Soviet countries, including Ukraine, Belarus, Azerbaijan and Moldova, has made these nation’s currencies among the worst performers so far this year.

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Brazil’s economy stagnated in 2014-2015, along with a general decline in commodity prices, which it relies on for exports. Political uncertainty and rising inflation has caused the Brazilian Real to lose nearly 20% so far this quarter.
The euro, the common currency of the Eurozone member nations, has seen its value steadily decline due to persistent economic woes, prompting the European Central Bank (ECB) to begin quantitative easing (QE) efforts in order to jump start the economies there. Furthermore, fear of a Greek exit from the euro and the contagion that would cause throughout the peripheral nations has depressed its value.
Scandinavian countries, although not members of the Euro currency, are nonetheless intrinsically linked to European economic activity. Sweden and Norway, in particular, who rely on oil production as a large part of their economy have seen their currencies fall just under 10% so far this year, extending losses from 2014. Likewise, the British pound has lost similar amounts.
Canada and Australia, both traditionally stable economies during economic downturns, have not been able to escape the effect of low oil and commodity prices. The Canadian dollar is down nearly 9% and the Australian dollar down almost 6.5% year to date. The New Zealand dollar, which is closely correlated with the Australian economy has also lost nearly 5% of its value so far this year.

5This is where we here at Casa de Montana Bed & Breakfast become concerned about our future guests in being able to take a much-needed vacation! We love meeting and spending time with not only the Canadians but people from all over the world. Debra, our Assistant Manager, is herself from Canada! So, what can we do to help? We ask all our future guests to give us a call or email us your inquiries and we will see what we can do to offer a bit of a discount to you to ease some of the financial burden. Please call us at Panama #: 507-730-9472 or U.S. #: 952-931-9770 or contact us directly through our website: www.casademontana.com. We want you to enjoy a vacation or two in your hard working year. We also want you to be able to enjoy activities and tours while you are here. So, let us try to help out with your stay with us!

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