Canadian dollar projected to be impacted by new Bank of Canada interest rates

July 9th, 2017  |  Canadian Business

With the Bank of Canada set to raise interest rates later this week, the Canadian dollar is likely to see a boost in value.

As per past trends, the effects of raising interest rates tends to lead to the growth of foreign investments and an increased demand for currency. In turn, this raises the value of said currency.

Currently the Canadian dollar is sitting at 0.77 cents in value when compared to the US dollar. According to financial experts, the interest hike will spur the value to reach 0.78 cents, with the possibility of seeing 0.80 cents by the end of the month.

"There's still room for the Canadian dollar to gain," said ForexLive currency analyst, Adam Button.

However, not everyone is convinced that the upcoming rise in interest rates will lead to a more valuable Canadian dollar. Some, like Karl Schamotta, director of global market strategy at Cambridge Global Payments, believes that higher interest rates will actually lead to a less valuable loonie. Schamotta is wary that the Canadian dollar may dip bellow the 0.77 cent mark once the rates are adjusted.

Instead of positive impact that many are predicting the higher interest rates will have for the country, Shamotta has said that it may not be "The light at the end of the tunnel, it may be the train."