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Talking down the Canadian dollar ignores long-term costs, critics warn

OTTAWA - The Conservatives may see the loonie's downward trajectory as giving the economy a fortuitous boost, but critics say talking down the currency could also exacerbate underlying problems in Canadian business.

Finance Minister Jim Flaherty has made a point of noting that a weak dollar can spur economic growth by boosting exports — a boon for a government with its sights set squarely on balancing the books.

But former Liberal finance minister Ralph Goodale warns against encouraging the dollar's descent.

He says a weak currency also raises the cost of importing goods, such as equipment, which can hurt productivity.

He says the Tories aren't addressing sluggish growth in productivity and declining international competitiveness.

The loonie dropped to 89.73 cents US today, one day after the Bank of Canada said the dollar remains strong despite its recent decline — a sign for some observers that the currency is overvalued.

The Canadian Press


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