When it comes to money and this blog, one of the only things I talk about is the exchange rate. In particular, I sometimes mention the US / Canadian dollar rates. On a day to day basis the numbers may not seem particularly important, but in a smaller economy such as Canada's, it can make all the difference. For example, although we too are mired in a recession, our fruit and vegetable prices have soared over the past half year. California vegetables ultimately have to be paid for in American dollars. However, the Canadian dollar took a dive when the world financial crisis imploded last fall. Whereas it reached a value of $US 1.10 about a year ago, as recently as April it had fallen to just $US 0.77.
Now the value of US currency is dropping in response to the unbridled use of the Federal Reserve printing presses. That plus the general rise in commodities in anticipation of signs of a recovery, means our dollar is back on the rise. The chart shows it topped $US 0.91 at the opening of the markets this morning.
As a consumer I can look at the situation as if it were a game. Following the trends is nearly as fun as going to a casino. I do not, however, know how businesses can manage such a volatile environment. It must make planning practically impossible.