Chapter 6: Cash, Short-Term Investments, and Accounts and Notes Receivable

Rising loonie will drag down economy
http://www.ctvbc.ctv.ca/servlet/an/local/CTVNews/20090529/Canadian_dollar_090529/20090529?hub=BritishColumbiaHome

summary:
This article mainly about how and why Canada’s currency raced higher versus the U.S. dollar affects Canada’s economy. Although the rising value of Canadian dollars is good for people spend holiday in the states, it may insert negative influence on nation’s manufacture and export. If the dollar continues to swell, there may be a massive $50-billion federal deficit in the coming up months. The last rise in Canadian dollars in 2007 is quite different for now because the last surge was caused mostly by the rising prices for oil and commodities, and this reduced the losses in Canada’s manufacture and export industries. However, the rise this time is because of the losing faith in the US dollar, which means the high export prices and low commodity prices can really affect Canada’s economy.

Connection:
This chapter is mainly about what can be done with excess cash on hand, and there is a small section about how the changes in purchasing power, which is the currency, can affect a company’s cash. With the rising value, Canadian manufacture is affected the most because American people may want lower prices commodities from other countries. Amid the economic crisis, most people are losing faith in the US dollar and stop hoarding it, as a result, the purchasing power for the US dollar drops tremendously, the face value for other dollars will not change, but it is affecting most countries economy if the US dollar drops.

Reflection:
Low commodity prices, high export prices and surging manufacturing costs could drive down corporate profits this year and further diminish Ottawa's tax base. This is because investors have started to unload the currency because of continuing signs that the worst of the global recession may have passed. Since it is a hard time for most manufacturing and export industries, government can have short-term investment on these industries to prevent the shortage of cash.