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During the last decade, the value of the Canadian dollar has experienced a decline, which has influenced Canada’s economic status at home and around the globe. This situation has created several questions and few answers to why this has occurred and continues to be observed. “A decline in the Canadian dollar from about 86 cents US in 1990 to about 63 cents US today, a decline of more than 25 percent.” In fact, in the last decade, one Canadian dollar bought in terms of foreign currency has decreased overwhelmingly. For example, against the British pound, the Canadian dollar has lost about 9 percent of its value over the last ten years. In November 2001, the Canadian dollar hit an all time low of US $0.623. But, this was not an unforeseen development. For the last ten years, the lonnie has been spiraling downwards. After reaching a peak of US $0.8934 in 1991, the Canadian dollar has fallen to US $0.73 in 1996, US $0.6211 in 1998 and finally below US $0.63 in late 2001. The low level of the Canadian dollar during the last decade is evident; however, the more vital realization is what measures must be taken to raise the value of the Canadian economy to preserve an optimistic future for Canada. The Canadian dollar has diminished in the last 10 years, which can be explained by the fall in demand for the Canadian dollar. Canada runs a floating exchange rate system where private investors determine the value of the Canadian dollar through a system of supply and demand. “Therefore, if there is an increase in Canadian investment, then the demand for and the value of the Canadian dollar goes up. On the other hand, if there is a decrease in Canadian investment, then the demand for and the value of the Canadian dollar goes down.” Over the last decade, a combination of factors has reduced the demand and value of the Canadian dollar. The more important factors include low interest rates, high government debt, Quebec separatism and declining commodity prices.
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