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De-valuation of USD

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asked 2017-02-10 15:12:28 -0600 by
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Hi Jin,

I have heard Trump talk a few time about devaluing the USD to enable the US to compete with countries like China. What impact do you think this will have on Canada, Energy stocks as well as other investments ?

Thanks

Rebekahmay

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answered 2017-02-11 12:04:05 -0600 by
Jin Won Choi gravatar image Administrator

Hi rebekahmay,

The global economy is a very complex machine, so it's hard to give definite answers. That said, a devaluation of the USD, if it happens, will probably hurt the Canadian economy because our good and services will become more expensive in relation to our U.S. counterparts'.

For energy companies specifically, the global oil price benchmark is quoted in U.S. dollars. If the U.S. dollar goes down and the oil price benchmarks don't move, that means the oil price in Canadian dollars go down, so that hurts our energy companies.

It's important to understand that while Trump wants the USD to go lower, some of his policies, if enacted, will actually pull the USD higher. Since we don't know which policies he'll actually adopt, I don't think we should base on investment decisions on it.

Jin

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Asked: 2017-02-10 15:12:28 -0600

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Last updated: Feb 11

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