We might cringe when we see the price at the pumps, but is there a silver lining? Can higher gas prices improve Canadians' purchasing power?

The Canadian dollar, often referred to as the "loonie," is closely tied to the price of oil due to Canada's significant role as an oil-producing nation. This relationship is not just a simple cause-and-effect scenario but rather a complex interplay of economic, geopolitical, and market forces. In this article, we will explore the intricate relationship between the price of oil and the value of the Canadian dollar.

Canada is one of the world's largest oil producers and exporters, with vast reserves of crude oil in Alberta's oil sands and other regions. As a result, the Canadian economy is highly dependent on the oil industry. When oil prices rise, it typically has a positive impact on Canada's economic performance, leading to increased revenue and investment in the oil sector.

What is the direct impact of oil prices on the Loonie?

One of the most immediate and apparent effects of changes in oil prices on the Canadian dollar is their correlation. When oil prices go up, the Canadian dollar often strengthens in tandem. This relationship can be attributed to several factors:

1. Increased Export Revenue: Higher oil prices mean that Canada earns more from oil exports, which can lead to a trade surplus. This surplus can increase demand for the Canadian dollar as foreign buyers purchase it to pay for Canadian oil.

2. Economic Growth: A thriving oil sector tends to boost Canada's overall economic performance, attracting foreign investments and bolstering the country's economic outlook. This can also lead to a stronger Canadian dollar.

3. Commodity Currency: The Canadian dollar is often considered a "commodity currency" because it is closely tied to the prices of natural resources, especially oil. As such, it is influenced by movements in global commodity markets.

The relationship between oil prices and the Canadian dollar is not solely determined by supply and demand dynamics. Geopolitical factors, such as conflicts in oil-producing regions or OPEC (Organization of the Petroleum Exporting Countries) decisions on production quotas, can have a significant impact on oil prices. These geopolitical events can influence the value of the Canadian dollar as investors react to changing global circumstances.

Market sentiment and speculative trading can also play a role in the relationship between oil prices and the Canadian dollar. Traders and investors often react to news and events in the oil market, leading to short-term fluctuations in the value of the loonie.

The relationship between the price of oil and the value of the Canadian dollar is multifaceted. While higher oil prices generally lead to a stronger Canadian dollar due to increased export revenue and economic growth, it's important to consider the influence of geopolitical events and market sentiment. As such, the link between oil prices and the loonie is not always straightforward, and a comprehensive understanding of global economic factors is necessary to grasp the full picture of this complex relationship. 

All of that is to say there are many forces at work here and while it may not be a steadfast rule that the Loonie gains when oil prices rise it may be worth calling your local Continental Currency Exchange to see how the rates are and make your decisions from there. 

Does the price of oil affect the Canadian Dollar?

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We will be offering Seniors Day discounts on Tuesday, September 5th.

Happy Labour Day!

Exploring the World: Top Study Abroad Destinations for Canadian Students

Are you a Canadian student eager to explore the world while pursuing higher education? Studying abroad can be a life-changing experience, offering the opportunity to immerse yourself in new cultures, broaden your horizons, and gain a global perspective. In this travel-themed blog article, we'll take you on a journey to the most common study-abroad destinations for Canadian students. From bustling cities to idyllic landscapes, these countries offer top-notch education and unforgettable experiences.



 The Land of Opportunities
It comes as no surprise that the United States tops the list of popular study-abroad destinations for Canadians. With world-renowned universities and a vast array of programs, American institutions provide excellent academic options. From the bustling metropolises of New York and Los Angeles to the serene campuses nestled in picturesque landscapes, the USA offers something for every student.

 A Taste of Royalty and Academia
Across the pond, the United Kingdom beckons Canadian students with its rich history, charming towns, and prestigious universities. From the iconic universities of Oxford and Cambridge to vibrant cities like London and Edinburgh, the UK provides a perfect blend of academic excellence and cultural exploration.

 Where Education Meets Adventure
For those seeking adventure Down Under, Australia offers a sunny haven of world-class education and natural wonders. From the iconic Sydney Opera House to the stunning Great Barrier Reef, Australian universities provide a unique learning environment amidst breathtaking landscapes.

 Embrace Romance and Education
Bonjour! France allures Canadian students with its enchanting ambiance, delectable cuisine, and rich artistic heritage. From the romantic streets of Paris to the historic campuses of Lyon and Bordeaux, studying in France promises an unforgettable cultural experience.

 Education Without Tuition Woes
In the heart of Europe, Germany has become a magnet for Canadian students seeking affordable yet high-quality education. With its cutting-edge research and technology-driven universities, Germany offers an excellent platform for academic growth.

 The Land of Innovation
The Netherlands boasts a dynamic and open-minded society that welcomes international students with open arms. Renowned for its engineering and research programs, Dutch universities offer a wide range of English-taught courses, making it a popular choice for Canadians.

 Where Tradition Meets Technology
Japan, a captivating blend of tradition and innovation, captivates Canadian students interested in unique experiences. From studying in Tokyo's futuristic metropolis to learning the art of tea ceremony, Japan promises a fascinating educational journey.

 A Fiesta for the Senses
Hola! Spain invites Canadian students to indulge in its vibrant culture, delicious cuisine, and lively atmosphere. With a plethora of English-taught courses and Spanish language programs, Spain caters to a diverse range of academic interests.

 Discovering the Korean Wave
Korea's rapid ascent on the global stage has piqued the interest of many Canadian students. With cutting-edge technology, K-pop culture, and ancient traditions, South Korea promises an unforgettable study-abroad experience.

Currency: Korean Won (KRW)


As Canadian students set out on the adventure of a lifetime, these top study-abroad destinations offer a plethora of opportunities to learn, grow, and discover the world. Whether you seek academic excellence, cultural immersion, or breathtaking landscapes, each of these countries presents a unique canvas for your journey. So, pack your bags, grab your passport, and embark on a study abroad experience that will enrich your life in ways you never thought possible. 

Continental Currency Exchange will waive the transfer fee when sending tuition payments directly to any College or University and with 19 locations across Ontario we make it easy to get the 

Top Destinations for Canadians Studying Abroad

Embracing Euro Euphoria: A Journey Through All Eurozone Countries and Their Allure for Travelers

Welcome to the captivating realm of the Eurozone, where 19 European countries have united under the euro currency to create a seamless travel experience for globetrotters. From ancient historical sites to breathtaking natural wonders, each country boasts a unique identity that beckons travelers from across the world. In this blog article, we embark on an enchanting journey through all the countries that use the euro, uncovering their distinct attractions and what makes them stand out as must-visit destinations.



Austria, the land of classical music and alpine grandeur, offers a perfect blend of cultural experiences and natural beauty. Visitors can indulge in the melodious notes of Mozart and Strauss in Vienna's concert halls, explore fairy-tale castles, and ski in the majestic Austrian Alps. The country's architectural wonders and Vienna's vibrant coffee culture add to the allure.




A tiny country with a big heart, Belgium enchants travelers with its rich history, delectable chocolates, and renowned beer culture. Discover the medieval charm of Bruges' canals, marvel at Brussels' stunning architecture, and relish the mouthwatering Belgian waffles. Don't forget to try the diverse range of Belgian beers that cater to every taste.

                                                                                                 The country to most recently adopt the Euro, located on the eastern coast of the Adriatic Sea, Croatia is a captivating destination that has been gaining popularity among travelers in recent years. Its rich history, stunning landscapes, and coastal charm make it a must-visit country for any wanderlust-filled adventurer.




Nestled in the Mediterranean, Cyprus boasts a fascinating blend of ancient history and beautiful beaches. Explore ancient ruins, such as Kourion, relax on the sun-kissed shores of Ayia Napa, and savor authentic Cypriot cuisine. The island's warm hospitality and crystal-clear waters make it an ideal destination for relaxation and exploration.




Estonia, a digital pioneer with a rich cultural heritage, surprises travelers with its medieval towns and cutting-edge technology. Wander through the enchanting streets of Tallinn's Old Town, marvel at well-preserved city walls, and experience the country's world-class e-services, making it one of the most digitally advanced nations.




The land of a thousand lakes and breathtaking natural wonders, Finland offers travelers an escape to pristine wilderness. Experience the magical Northern Lights in Lapland, enjoy the midnight sun in summer, and immerse yourself in Finnish sauna traditions. The country's untouched beauty and friendly locals create a truly unforgettable experience.




France, synonymous with romance, art, and gastronomy, has an endless array of treasures to explore. Admire the iconic Eiffel Tower in Paris, wander through the picturesque villages of Provence, and indulge in exquisite French cuisine and wines. France's cultural richness and diverse landscapes make it a perennial favorite for travelers.




Germany, a tapestry of history and modernity, welcomes visitors with its vibrant cities and enchanting countryside. Explore Berlin's bustling art scene, admire fairytale castles in Bavaria, and revel in the lively Oktoberfest in Munich. The scenic Rhine Valley and the Black Forest region offer picture-perfect landscapes for hikers and nature enthusiasts.




Greece, the birthplace of Western civilization, boasts a wealth of ancient wonders and breathtaking islands. Discover the historic treasures of Athens, bask in the beauty of Santorini's sunsets, and immerse yourself in the lively atmosphere of Mykonos. Greek cuisine, with its delectable moussaka and souvlaki, is a treat not to be missed.




Ireland's verdant landscapes and warm hospitality make it a charming destination for travelers seeking a blend of history and natural beauty. Explore Dublin's literary heritage, marvel at the rugged Cliffs of Moher, and experience the magic of ancient castles scattered across the countryside. Irish pubs and traditional music create an inviting atmosphere for all.




Italy, an enchanting land of art, history, and mouthwatering cuisine, is a dream destination for many. From the eternal city of Rome and the romantic canals of Venice to the artistic treasures of Florence, Italy delights at every turn. Indulge in authentic pasta, pizza, and gelato, and savor the dolce vita lifestyle that epitomizes Italy.




Latvia, a hidden gem in the Baltic region, boasts a rich cultural heritage and stunning landscapes. Explore Riga's picturesque Old Town, witness the architectural marvels of Art Nouveau buildings, and escape to the serene beaches of Jurmala. Latvia's tranquil beauty and vibrant arts scene leaves a lasting impression on travelers.




Lithuania, with its charming blend of medieval and modern influences, offers a delightful experience. Vilnius, the capital, is a UNESCO-listed Old Town with cobblestone streets and historic churches. The picturesque landscapes of the Curonian Spit and the Hill of Crosses add to the country's allure.




Luxembourg, a small country with a big heart, surprises visitors with its stunning castles and scenic landscapes. The capital, Luxembourg City, boasts ancient fortifications and a vibrant cultural scene. The country's peaceful ambiance and lush countryside make it an ideal destination for relaxation and exploration.




A Mediterranean gem, Malta impresses travelers with its fascinating history and crystal-clear waters. Explore the ancient temples of Ħagar Qim and Mnajdra, soak up the sun on the sandy beaches, and dive into the turquoise Blue Lagoon. Malta's warm climate and friendly locals create a welcoming atmosphere for all.




The Netherlands, known for its iconic windmills, tulip fields, and picturesque canals, is a traveler's paradise. Amsterdam's vibrant art scene and historic architecture are complemented by the serene beauty of the countryside. Discover the charm of Dutch villages like Giethoorn and taste traditional Dutch cheese and stroopwafels.




Portugal, a country of captivating landscapes and seafaring traditions, offers a diverse range of experiences. Explore Lisbon's colorful streets, indulge in Porto's world-famous Port wine, and relax on the Algarve's golden beaches. Portugal's warm climate and friendly locals make it a year-round destination.




Slovakia, an underrated destination with a rich folk culture and stunning landscapes, surprises travelers with its authenticity. Bratislava, the capital, boasts an inviting Old Town and a majestic castle overlooking the Danube River. The High Tatras, a paradise for hikers, offer breathtaking mountain vistas.




Slovenia, a land of diverse beauty, captivates visitors with its charming capital, Ljubljana, and the mesmerizing beauty of Lake Bled. Explore the underground wonders of Postojna Cave, indulge in Slovenian wine in the picturesque vineyards, and experience the country's love for outdoor activities.




Spain, a country of fiestas, flamenco, and historic wonders, offers an unforgettable adventure. From the architectural marvels of Barcelona's Sagrada Família to the vibrant streets of Madrid, each region has its allure. Enjoy the pristine beaches of Costa del Sol, savor paella in Valencia, and experience the passion of Seville's flamenco dance.


The Eurozone opens the door to an enchanting array of European destinations, each one a treasure trove of history, culture, and natural beauty. From the romance of Paris to the Mediterranean charm of Greece and the Nordic wonders of Finland, the euro brings travelers on a seamless journey

What countries use the Euro?

Calling all adventurers! Are you ready to embark on an unforgettable summer journey to the enchanting lands of Europe? Here's why traveling to Europe this season will be an absolute blast for you! 

1. Rich Cultural Heritage: Prepare to dive headfirst into a tapestry of history, art, and culture! From exploring ancient ruins in Rome to wandering through the charming streets of Paris, Europe is a treasure trove of captivating stories and awe-inspiring architecture.

2. Breathtaking Landscapes: Picture yourself standing amidst the breathtaking Swiss Alps or admiring the azure blue waters of the Greek islands. Europe boasts an incredible variety of natural wonders, making it a dream destination for nature lovers and avid photographers alike.

3. Culinary Delights: Get ready to tantalize your taste buds with a mouthwatering array of culinary delights! From indulging in delicious croissants in France to savoring authentic pasta in Italy, Europe offers a gastronomic adventure like no other.

4. Vibrant Festivals: Europe knows how to celebrate, and summer is the season for exciting festivals and events! Join the colorful festivities of La Tomatina in Spain, dance to lively music at Tomorrowland in Belgium, or witness the spectacle of the Edinburgh Festival in Scotland.

5. Easy Accessibility: Canada and Europe are well-connected, making it incredibly convenient to travel between the two continents. With numerous direct flights and travel options, you'll be exploring the wonders of Europe in no time!

6. Breathe in the Art: Europe is a haven for art enthusiasts. Whether you're wandering through the Louvre in Paris, admiring the masterpieces of the Uffizi Gallery in Florence, or getting lost in the charm of the Prado Museum in Madrid, you'll find inspiration at every turn.

7. Wander Through Time: Europe is a living testament to centuries of history. Imagine strolling along the cobblestone streets of Prague's Old Town or marveling at the ancient wonders of Athens. The blend of old and new will transport you to a different era.

8. Diverse Adventures: Europe offers a smorgasbord of adventures to suit every taste. Hike the picturesque landscapes of the Scottish Highlands, indulge in thrilling water sports along the Mediterranean coast, or cycle through the charming countryside of the Netherlands.

Capture lifelong memories, taste extraordinary flavors, and create unforgettable experiences on your European summer escapade!  So pack your bags, stop by your local Continental Currency Exchange, and make sure you bring all the cash you might need at the best rates guaranteed.  Get ready to embark on a journey that will ignite your wanderlust and leave you craving for more! Travel Awaits!

Travel Awaits! Europe is Waiting. 

Currency in Denmark has a long history dating back over a thousand years. Today the country has one of the world's most dynamic and diverse economies with a strong connection to Europe while retaining its own identity. If you need to buy Danish kroner, you can rely on a relatively stable currency that is tied to the euro.

The oldest Danish coins are the ‘cross-coins’ issued by Harald Bluetooth in the late 900’s and for almost 1000 years Denmark has issued coins with the name of their king. Coins were valued in silver, but in order to make money for the monarchy often the silver percentage in coins was reduced without a corresponding drop in value. As a result people lost trust in the value of coins. The krone (meaning ‘crown’ in English) was first issued in 1619 at a value of 1 ½ Danish Rigsdaler Species or 144 common Skillings. A new krone was the later introduced in the 18th century and during this same period banknotes grew in popularity. This new krone was part of the Scandinavian monetary union between Sweden, Norway and Denmark which ended in 1914, but all three countries retained the name krone.

All Danish coins are designed to be immediately distinguishable from one another. Each has its own metal colour; 50-øre coins are copper coloured, the 1, 2 and 5 krone coins are silver coloured and the 10 and 20 krone coins are gold coloured. Within each colour level the coins increase in size and weight based on their value. So the 5 krone silver coin weighs more than the 1 krone silver coin. The 1, 2 and 5 krone coins all also have holes in the middle, and the rims of the 2 and 20 krone coins have interrupted milling while the 50 and 10 krone coins have smooth rims. The different sizes, weights and textures make krone coins easily recognizable for sight-impaired people. In terms of design, the 50-øre coins feature a heart symbolizing the Royal Mint on the reverse with the Crown of King Christian V on the obverse. The 1, 2 and 5 kr coins feature a monogram of Queen Margrethe II on the obverse and a traditional design on the reverse. The 10 and 20 kr coins have Queen Margrethe II on the obverse with the national coat of arms on the reverse.

The most recent series of banknotes was designed in 2006 by the Danish National Bank. The theme is ‘bridges’ and their surroundings. Representing the link between Denmark's regions and between past and present, the bridges were designed by Karin Birgitte Lund. On the obverse of each note is an artifact representing the country’s past.

Early incarnations of the krone were valued based on the metal they were minted in - usually silver or gold. The gold standard was abandoned in 1914, and although the Danish krone returned to it for a brief time, it was once again abandoned during the interwar period. During the Second World War the krone was tied to the German Reichsmark. After the country was liberated the krone was pegged to the pound at a rate of 24 kr to 1 pound, and then later at 19.34 kr to 1 pound. Today, Denmark is part of the EU though it has the right to opt-out of using the euro. Though there is support for adoption amongst major parties, a referendum in 2000 was defeated by a 53.2% vote against joining the eurozone. Nevertheless, the country is participating in ERM II (Exchange Rate Mechanism II, which is a necessary step in joining the euro) and so is pegged to the euro.

Denmark's economy is diverse but generally reliant on human resources. There are few natural resources, and services make up over ¾ of the country’s GDP, with industry making up 20% and agriculture just 4.5%. The country has the world's lowest level of income inequality, but no stipulated minimum wage. With one of the healthiest and most diverse economies in Europe, many in Denmark remain skeptical about joining the euro, and it remains a distant proposition.

Denmark's economy is frequently held up as an example to the rest of the world. Unemployment is low, inequality is low, it is diverse, free from corruption, and well-managed. The value of the krone is reliable and steady thanks to being pegged to the euro vie ERM II.

Currency Spotlight - Danish Krone

As one of the ‘majors’, the Swiss franc wields tremendous influence over the foreign exchange market every day. So whether you need to buy Swiss francs or just want to learn more about this important global currency, we’ve got you covered.

 5, 10, & 20 centimes, ½, 1, 2, & 5 francs

Prior to the release of the Swiss franc, there were almost too many different currencies in the country to count. Every canton, as well as many cities and even abbeys, minted their own coins – resulting in nearly 900 different currencies in total. For a short period in the late 18th, early 19th centuries, the Helvetic Republic introduced its own currency – though this wasn’t meant to last. From 1803 to 1850, the currencies used in Switzerland were a mix of various canton-minted coins plus a majority of foreign currency brought back by Swiss mercenaries.

On the back of a new constitution, 1850 brought about a formal agreement (the Federal Coinage Act) establishing the Swiss franc as the sole currency of Switzerland; following which it was introduced on par with the French franc. In 1865, the Latin Monetary Union was established whereby Switzerland (along with France, Italy, and Belgium) agreed to tie the franc to a standard value of gold or silver. After the agreement dissolved, the Swiss franc saw various pegs and devaluations – eventually joining the Bretton Woods system at the end of World War II.

For many years, Swiss currency was considered stable and safe thanks to a large backing of gold reserves and no inflation. While the currency is no longer tied to gold as of the year 2000, the government still holds large amounts of it (though it has shrunk from 40% to 20% of total reserves).

Recently, the franc has caused upheaval not just in Switzerland, but also throughout the global FX market. From 2011 onwards, the franc was seen as highly overvalued in relation to other currencies. This led to the government capping the value in order to keep it from climbing too high. On January 15, 2015, without warning, the Swiss National Bank abandoned the cap, sending the franc skyrocketing against the US dollar and euro. This move proved disastrous for some currency traders while markets across the world tried to deal with the unexpected development.

The current series of Swiss franc banknotes are differentiated by colour as well as design. Like most banknotes around the world, they feature famous country persons on the obverse including architect Le Corbusier, artist Sophie Taeuber-Arp, and writer Charles-Ferdinand Ramuz, among others. The reverse of the notes features landmarks, symbols, and designs important to Swiss national consciousness (even if they’re not all in Switzerland – such as the Palazzo Strozzi in Florence, Italy). A new series is due to be released this year after several delays largely due to controversy regarding the chosen designs.

Coins have a much longer history in Switzerland than banknotes. The current series is differentiated by size, though the composition is the same (cupronickel) in all but the 5-centime coin. Because the country has four national languages, the coins feature only the abbreviation (Fr.) alongside Latin phrases.

The early history of the CHF is characterized by pegs to the French franc, USD, gold, or silver. The recent history of the value however is tumultuous enough to write an entire book on – so we’ll try to summarize it in a paragraph or two. By August 2011, the CHF had reached a staggering value of over 1 to 1.30 USD. With the value only going up (and nearly reaching parity with the EUR), the Swiss National Bank stepped in to cap it at 1.20 CHF to 1 EUR. Since the CHF had largely been a ‘safe haven’ for investors, this intervention shocked currency markets.

This wasn’t the end of the story. In what’s been called the ‘Francogeddon’, the Swiss National Bank did away with the cap on January 15, 2015. This caused the value of the CHF to skyrocket once more (23% against the EUR and 21% against the USD in one day).

Despite the turmoil involving the franc, the Swiss economy is generally seen as one of the world’s most stable (and relatively large considering the country’s size) - making the franc a popular investment. Beyond this, trade is of huge importance with Swiss exports like watches and jewelry popular around the world. Industry is also a major sector of the Swiss economy, particularly in pharmaceuticals.

In addition, the banking system has long been recognized as stable and Switzerland's pride in its neutrality and sovereignty have made it a popular refuge for foreign assets.

Switzerland has one of the most intriguing currencies and economies in the world. Renowned exports, private banking, and, most of the time, a stable currency made it the envy of many around the world.

Whether you need to buy Swiss francs or any other currency from over 100 different countries, we’ve got you covered!

Currency Spotlight - Swiss Franc

Understanding how currency exchange rates work is important for businesses, investors, currency traders, and, of course, vacationers. But what causes currency exchange rates to fluctuate up and down? FX101 breaks down the world of currency exchange, from the fundamental to the complex.

Here are 10 factors that affect currency exchange rates:

Currency can be bought and sold just like stocks, bonds, or other investments. And just like these other investments – and almost anything else you can buy or sell – supply and demand influences price. Supply and demand is one of the most basic economic principles, but nevertheless can serve as a good starting point to understand why currency exchange rates fluctuate.

Currency is issued by governments. In order for a currency to retain its value (or even exist at all) the government which backs it has to be strong. Countries with uncertain futures (due to revolutions, war or other factors) usually have much weaker currencies. Currency traders don’t want to risk losing their investment and so will invest elsewhere. With little demand for the currency the price drops.

Economic uncertainty is as big of a factor as political instability. A currency backed by a stable government isn’t likely to be strong if the economy is in the toilet. Worse, a lagging economy may have a difficult time attracting investors, and without investment the economy will suffer even more. Currency traders know this so they will avoid buying a currency backed by a weak economy. Again, this causes demand and value to drop.

A strong economy usually leads to a strong currency, while a floundering economy will result in a fall in value. This is why GDP, employment levels and other economic indicators are monitored so closely by currency traders.

Hyperinflation crippled Zimbabwe's economy throughout the late 1990's and 2000's and decimated the value of the country's currency

Low inflation increases the value of a currency, whereas high inflation usually makes the value of a currency drop. If a candy bar costs $2 today, but there is 2% inflation then that same candy bar will cost $2.02 in a year – that’s inflation. Some inflation is good, it means that the economy is growing but, high inflation is usually the result of an increase in the supply of currency without an equal growth in the real value of a country’s assets.

Think of it like this, if there is more of something then it’s usually worth less - that’s why we pay so much for rare autographs and collectors’ items. With more currency in circulation the value of that currency will drop. Inflation results from a growing economy, this is why China, India and other emerging economies typically have high growth and high inflation – and their currencies are worth less. Zimbabwe experienced hyperinflation throughout the late 1990's and 2000's reaching as high as 79.6 billion percent in 2008, rendering the currency near worthless.

But wait, right now many European countries have low, or even negative inflation so how is it that the euro is dropping? Well, inflation is just one of many factors which impact currency exchange rates.

When the Bank of Canada (or any other central bank) raises interest rates it’s essentially offering lenders (like banks) a higher return on investment. High interest rates are attractive to currency investors, because they can earn interest on the currency that they have bought. So when a central bank raises interest rates investors flock to buy their currency which raises the value of that currency and, in turn, boosts the economy.

But remember, no one single factor influences currency exchange. Often times a country will offer a very high interest rate but the value of that currency will still fall. This is because despite the incentive of profiting from a high interest rate, traders may be wary of the economic and political risks, or other factors – and thus refrain from investing.

A country’s balance of trade (meaning how much a country imports vs how much that country exports) is an important factor behind exchange rates. Simply put, balance of trade is the value of imports minus the value of exports.

If a country has a trade deficit, the value of their imports is greater than the value of their exports. A trade surplus occurs when the value of exports exceeds the value of imports.

When a country has a trade deficit it needs to acquire more foreign currency than it receives through trade. For example, if Canada had a trade deficit of $100 to the US it would have to acquire $100 in American currency to pay for the extra goods. What’s more, a country with a trade deficit will also be over-supplying other countries with their own currency. The US now has an extra $100 CND that it doesn’t need.

Basic supply and demand dictates that a trade deficit will lead to lower exchange rates and a trade surplus will lead to a stronger exchange rate. If Canada had a $100 trade deficit to the US then Canadian demand for USD would be high, but the US would also have an extra $100 Canadian so their demand for CAD would be low – due to excess supply.

Debt, specifically public debt (that is the debt incurred by governments) can also greatly affect interest rates. This is because a large amount of debt often leads to inflation. The reason for this is simple - when governments incur too much debt they have a special luxury that you or I don’t have - they can simply print more money.

If the US owed Canada $100 the American government could simply run over to the mint, fire up the presses and print out a crisp new $100 bill. So what’s the problem? Well, $100 isn’t a lot of money to a government nor is $1 million, $1 billion is pushing it but Canada’s public debt is over $1 trillion while America’s is well over $15 trillion (and grows by $2.34 billion per day). If a country tried to pay its bills by printing money then it would experience massive inflation and ultimately devalue its currency.

Investors will also worry that a country could simply default on its obligations – or to put it another way - be unable or unwilling to pay the bills. This is the precarious situation Greece and the eurozone find themselves in currently.

Quantitative easing – usually shortened to QE – is a mouthful, but it really isn’t all that complicated. The simplest explanation is that central banks will try to stoke the economy by providing banks with greater liquidity (meaning cash) in the hopes that they will then lend or invest that money and in doing so boost the economy. In order to provide this greater liquidity central banks will buy assets from those banks (usually government bonds).

But where do central banks find this extra cash? The short answer is: they create it. Creating more currency (increasing supply) will devalue it, but it will also lead to economic growth – or so the theory goes.

What’s the point of quantitative easing? Central banks will only use QE in times of low growth when they have already exhausted their other options (like lowering interest rates). After the 2008 financial crisis, the US, UK and other countries implemented QE, and the European Central Bank just recently announced that it too will use QE to try to restart the Eurozone economy.

Unemployment levels in a country affect almost every facet of its economic performance, including exchange rates. Unemployed people have less money to spend, and in times of real economic hardship high levels of unemployment will encourage employed people to start saving, just in case they wind up unemployed too. Unemployment is a major indicator of an economy’s health. In order to boost employment a country must boost the economy as a whole. To do this central banks will lower exchange rates and even resort to more extreme measures like quantitative easing, both of which can negatively impact the value of a currency. This is why currency traders pay such close attention to employment statistics.

Most countries aim for about 2-3% growth per year. High levels of economic growth lead to inflation, which can push the value of currency down. In order to avoid devaluing their currency central banks will raise interest rates, which will push the value of a currency up. Growth forecasts are important indicators but have to be carefully weighed against other factors.

If this article has demonstrated anything, it's that no single factor determines exchange rates. S

upply and demand, political stability, economic strength, inflation, interest rates, trade balance, debt, QE, unemployment 

 all interact (and sometimes contradict) each other. FX is complex and it is never advisable to make serious investment decisions without the aid of a licensed professional.

FX101 - Why Do Currency Exchange Rates Change?

The Indian rupee has been used in the Indian subcontinent for generations, spanning from long before the British colonial period to the modern day.

₹5, ₹10, ₹20, ₹50, ₹100, ₹500, ₹1000

As far as currencies go, the rupee has one of the longest-known histories, dating back to the 6th century BC. Along with Greece and China, ancient India was one of the first places to issue coins. There are various words from which the name ‘rupee’ comes from such as the Sanskrit ‘raupya’, ‘rūpyakam’, and ‘rūpya’ as well as the Hindu ‘rūpaya’. What’s most important here is that ‘rūpya’ means ‘wrought silver, a coin of silver’.

Indeed, historically the rupee was generally made of and tied to the value of silver. This would be especially relevant during the 19th century when large amounts of silver were found in the US and European colonies, resulting in a drastic fall in the value of the rupee. But we’re getting a bit ahead of ourselves. Even before the colonial era, the Maurya, Mughal, and Maratha Empire’s (stretching from the 3rd century BC to the 1800s) used various types of silver coins.

When the British instituted direct control over India in 1857, they attempted to make the pound sterling the country’s official currency. However, the British currency never left the vaults, and they soon gave up on attempting to replace the rupee.

Following the end of colonial rule in India, the rupee began to replace other regional currencies such as the Portuguese Indian escudo, which was used in and around Goa. In 1957, the rupee was decimalized (broken up into 100 paise per rupee). Since then, the rupee has been on the decline relative to the US dollar.

The banknotes of the rupee have undergone several iterations since paper money was first introduced in 1861. Significantly, the portrait of the king was dropped from the bills after India gained independence from the British. Other watershed moments before the current crop of bills was the discontinuation of the ₹1 and ₹2 notes in 1995. In 1996, India replaced all banknotes with the Mahatma Gandhi series. As you might expect, the obverse of the notes features the image of Gandhi based on a photo of him with British politician Frederick Pethick-Lawrence. Other images on the bill include the seal of the Reserve Bank, Ashoka Pillar emblem, clause of guarantee (“I promise to pay the bearer a sum of” - which dates back to when notes represented material deposits), and the signature of the banks governor. In addition, each denomination is a different colour with a unique design on the reverse. These designs include the Himalayas, Indian Parliament, various native animals, and a tractor among others. In 2009, the Reserve Bank introduced 1 billion polymer ₹10 notes (like Canada) due to better security features and higher durability. The Bank has stated it plans to introduce more polymer notes on a pilot basis but isn’t fully switching over yet.

Rupee coins have a long history but the beginning of modern coinage in India can be traced to 1835 with the British East India Company. Following direct control, the coins were ‘regal’ meaning they had a portrait of the reigning monarch upon them. In 1957, the coins for a fully independent India were released. The denominations have changed over the years, in accordance with the value of the rupee. As such, the 50 paise coin is now the lowest in value, and even that is rarely seen. All coins feature the Emblem of India and the value while some coins have other designs or decals. Most of the coins are made with stainless steel though nickel or brass is also used for some.

Prior to World War I, the INR was pegged to the GBP while essentially on par with the USD. Following this, the INR has been in decline against the USD for most of the last century. The peg has been devalued and adjusted through the years. Prior to 1966, it was essentially 4 INR per USD. In 1966, the peg was adjusted to 7.5 INR per USD. Since then, the value of the INR has rapidly gone down relative to the USD.

Over the last 10 years, the INR’s highest value was 39.125 per USD. This was recorded on November 9, 2007 and February 1, 2008. Since then, the value of the INR has steadily dropped for the most part with some appreciation here and there.

The Indian economy is one of the largest and fastest growing (comparable with China) in the world. As a member of both the BRICS (up-and-coming countries in both economic and political matters) and the G-20, India is an increasingly important force on the international stage.

Between Indian independence, in 1947, and the early ’90s, the economy was largely centrally planned and interventionist. This failed to take advantage of the expansion and ultimately resulted in a poorly managed economy. After a crisis in 1991, the authorities realized they had to change their approach. Since then, the country has been an increasingly free market with openness to international trade. As a result, the economy has been progressing rapidly. There are issues however, with growth slowing around the year 2012. In addition, the low value of the rupee, high account deficit, economic inequality, and bureaucratic red tape are all challenges the country has to face going forward.

The Indian economy is roughly divided into three sectors – agriculture, industry, and services. In the agriculture sector, India is second in the world in farm output. Agriculture employed more than half the workforce in 2012, though the contribution to GDP has been on the decline – 17% in 2012. Industry on the other hand accounts for 26% of the country’s GDP – with manufacturing output the 9th or 10th (depending on how it is measured) largest in the world. Cheap labour, improved management, and modern technology are all factors in India’s high manufacturing output. Petroleum products, pharmaceuticals, engineering, precious stones, textiles, and mining are all major facets of the Indian industrial sector. ‘Services’ a term used to encompass everything from energy, infrastructure, and IT to retail and tourism accounted for 57% of India’s GDP in 2012 after expanding for the previous half-century.

Like the other BRICS (Brazil, Russia, China, and South Africa), India will continue to have an increasingly important place in global economic and political matters. While there are some serious domestic issues, India’s massive population and rapid modernization among other benefits make it well-placed going into the future.

Currency Spotlight - Indian Rupee

For most of us, the Canadian dollar is just another part of life. Whether a loonie, toonie, new bill, or old – the dollar has been the currency used in Canada for over 150 years.

The history of modern currency in Canada begins with the Canadian pound. Adopted in 1841, it was equal to four US dollars at the time. The ensuing decades however brought much debate about whether to persist with the sterling system or switch to the increasingly popular decimal system (one unit subdivided into a hundred smaller ones). After much debate and compromise, the decision was finally made in 1857 to adopt the decimal system, partly due to increased trade with the US. As a result, the new Canadian dollar was introduced in 1858.

Throughout the second half of the 19th century, British Columbia, New Brunswick, PEI, and Nova Scotia decimalized their currency – though they all joined the dominion of Canada before long. Newfoundland also decimalized, though their basis for comparison was initially the Spanish dollar (which resulted in a slightly higher value currency). In 1895, the Newfoundland dollar was pegged to the Canadian dollar, which lasted into Newfoundland joined Canada in 1949.

The 20th century saw the gold standard abandoned in 1933 during the Depression. From the outbreak of World War II and continuing for the next couple of decades, the Canadian dollar was alternatively pegged to the US dollar at different amounts or allowed to float. In 1970, the peg was removed for good and the dollar now floats freely against other major currencies.

There have been numerous series of Canadian banknotes released over the years. Some feature Canadian scenes, others the reigning monarch, while some put the focus on previous prime ministers. The current series, known as the Frontier series, was released in 2011. The notes are differentiated by colour and feature four prime ministers (Sir Wilfred Laurier, Sir John A. Macdonald, William Lyon Mackenzie King, and Sir Robert Borden) as well as Queen Elizabeth II on the $20 bill. The notes are also differentiated by designs on the reverse, including the Canadarm2 on the ISS, the Vimy Memorial, and the CCGS Amundsen. The most well-known feature of the current series of notes is that they’re all made from polymer.

Two of the most well-known Canadian coins are the $1 and $2. The $1 is known as the loonie (due to the bird which appears on the coin) and the $2 is known colloquially as the toonie (get it?). One of the more significant events in Canadian coinage recently was the cessation of penny circulation in 2013. Now, all cash transactions are rounded to the nearest 5¢.

The main point of comparison for the CAD has always been the USD, thanks to Canada’s proximity and important economic relationship with the United States. Since 1998, the Bank of Canada has made it a point not to intervene to affect the currency’s value. While occasional minor adjustments might be made, the CAD floats freely for the most part. In modern times, the CAD is usually found close to par or just below the value of the USD. There have been times when the CAD is valued higher than the USD, reaching a recent high 1 USD to 0.907 CAD on November 7, 2007. In the past 10 years, the lowest value the CAD has fallen to relative the USD is 1.2862 CAD to 1 USD on March 6, 2009. While the CAD was valued higher than the USD for brief periods between 2010 and 2012, the strong USD has returned the gulf between the two currencies to close to a modern high.

Canada is one of the wealthiest countries in the world and is a member of many international and regional organizations such as the G7. Like many highly developed countries, Canada has a diversified economy with a large service sector. Accounting for about 78% of the GDP, the service sector includes retail, business, education, health, high-tech (especially entertainment software), and tourism. Logging is an important industry, as is petroleum. Canada is a net exporter of energy – rare among developed countries.

The Canadian dollar is and will continue to be one of the world’s most important and most traded currencies. The economy is strong, with a diverse base. 

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