COMPAS Poll/Survey
May 23, 2006
 

Exchange Rates - Bank of Canada Should Not Raise Rates Wednesday; Ideal Loonie Is U.S. $ 0.86, But Likely Value Will Be U.S. $ .93; Rising Loonie Not Likely to Trigger Recession But Rise Appears to Have Harmed Some Businesses; Bank of Canada Governor Earns High Scores Despite Worries

  A Weekly BDO Dunwoody CEO Business Leader Poll by COMPAS in the Financial Post
 
Categories:
Elections
Policy and Opinion
Consumer and Lifestyle
Business and Finance
Almost three-quarters of the COMPAS CEO/business-leader panel want the Bank of Canada not to raise interest rates tomorrow (Wednesday May 24). Half say they want the dollar to decline "gradually" or “sharply.” This is the highest number calling for depreciation since COMPAS started asking the question in November, 2003. Then, the dollar was worth U.S.$0.75. On Friday it closed at U.S.$0.89.

The panel believes that the idea rate for the Loonie is U.S. $ 0.86 but expects it to nonetheless rise to U.S. $ .93 within a year.

About a third perceive the rising dollar as harming their businesses, in some cases severely. "I expect that my company will go out of business in two or three years if the exchange rate is not lowered," writes one executive. “[Allowing the dollar to rise] is desperate and irresponsible of the Bank of Canada. Will [Bank of Canada governor David] Dodge wake up before it is too late?” By contrast, other panelists consider complaints about exchange rates as poor excuses for low productivity.

A plurality do not expect that the high dollar will drive the economy into recession. Forty-three per cent of panelists do not believe the dollar will trigger a recession; 24% do.

Despite concern about the rising loonie, Bank of Canada Governor David Dodge continues to earn very high performance scores.

There is lower support today for adopting the U.S. dollar than there has been over the past five years. Seventy per cent say Canada should not seriously consider the idea, compared with 46% who rejected giving it thought in November of 2001. Then 54% wanted to think it over; today 29% do.

These are the key findings from the current web-survey of the panel of CEOs and business leaders undertaken for the Financial Post under sponsorship of BDO Dunwoody LLP.

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