Title: Short-term volatility and the long-term trend of the Canadian dollar on the foreign currency market

Authors: Rayan Chelli; Muhammed Kabir

Addresses: School of Business Administration, Canadian University of Dubai, Shaikh Zayed Road, Dubai, UAE ' Canadian University of Dubai, Shaikh Zayed Road, Dubai, UAE

Abstract: Many factors affect the value of the Canadian dollar, such as expectations, commodity prices, budget and current account deficits, debt ratios, interest rates, political stability, and speculation. Because the Canadian economy heavily relies on foreign trade and investment, fluctuations in the value of the Canadian dollar have far-reaching implications for the nation's economic growth and stability. In this thesis, an attempt is made to understand the complex nature of the foreign currency markets and how the Canadian dollar has performed in the last three decades. The study has found that commodity prices, interest rate differentials, diverging inflation rates, and political events all have significant influence on the value of the dollar. The relative impact of each in part depends on the time horizon analysed.

Keywords: exchange rate regimes; purchasing power parity; PPP; hedging; World Trade Organization; WTO; hard currency; Canada; short-term volatility; long-term trends; foreign currency markets; exchange rates; Canadian dollar; commodity prices; interest rates; inflation rates; political events; politics.

DOI: 10.1504/IJMD.2016.076554

International Journal of Management Development, 2016 Vol.1 No.3, pp.246 - 259

Received: 14 Nov 2015
Accepted: 06 Dec 2015

Published online: 12 May 2016 *

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