Article Analysis Essay Example | Topics and Well Written Essays - 1750 words - 1

Article Analysis - Essay standardTargeting the investors and potential investors in the Canadian stock exchange, the article warns them of the imminent crisis that has already started taking shape on the economy of Canada. It likewise targets the policymakers who are supposed to take into account the pitfalls and despatcher solutions of how the situation can be improved. According to them, an investor who opts to hold their enthronizations in the Canadian BMO Capital Market Authority or any investment banks in the country risk making losses from their investments. They provide evidence supporting their hypothesis which indicates a losing trend that the Loonie has been facing in the recent years. Basically, the subject of their argument is the contribution of the crude crisis to the poor carrying out of the Canadian dollar in relation to early(a) currencies and the U.S. dollar. Other contributing factors to soring the situation pay back been discussed, which implicate low bu ying of the government bonds and the decreasing demand for Canadas triple-A-rated sovereign debt. The poor performance of the loonie against another(prenominal) currencies prompted Walter & Karen to write this article. Most importantly however, it was the poor sale of the countrys crude oil that do the issue more than serious warranting their reference to the poor performance of the money. The fact that Canadas oil prices have been performing poorly in reference to other oil producing states is evidence to this. Trading at around $ 65 a barrel, the Canadian oil poorly performs against international oil prices. In the article, Loonie Slips on oil color Patch Walter & Karen explores the influence of Canadas oil reserves on the performance of the Canadian dollar. While the worldwide crude oil prices have remained competitively high, the poor price of the Canadian oil proves to be a liability to the countrys economy and exchange rate. The major contributing factor of this trend i s the nose drops in the U.S. oil in the Northern American region. A barrel of the Canadian oil trades at only $65 dollars, while the international market prices stand at $115 per barrel. Contrary to other currencies that move along with the changes in the oil prices, the loonie has been facing a downward performance against the dollar, shedding off 0.5% this year. The biggest disadvantage of the Canadian currency, points out experts is over reliance on petrol exports. The weak currency is judge to remain weak so long as the oil prices remain low. Effects of the poor prices of the oil have not only negatively influenced on the currency performance, notes Walter & Karen. The shocks of this have been felt by the economy, negatively affecting the annual economic growth which the central bank forecasted to drop from 2.3% to 2%. Moreover, the prices have also contributed to a widening trade deficit, reaching up to C$2 billion. As experts continue loosing anticipate in the recovery of t he dollar, more investors keep pulling out of the market. Data indicates so, as bonds have been facing a decreasing trend since June of last year, hitting the lowest point in November. As more people shy from bond buying that was the biggest source of income for the countrys funds, the face value of the currency seems to be overvalued. The oil