BUSINESS TICKER: ECONOMY: CURRENCY Don't stop dollar's rise, report urges Ottawa

Marian Stinson Buoyant world demand for Canadian exports and the depreciation in the U.S. dollar are the reasons behind the stellar rise in the Canadian dollar, and it would be a mistake to intervene in currency markets or lower interest rates to halt its ascent, according to the C.

D. Howe Institute. "To hold the dollar down in current conditions, the Bank of Canada would have to ease monetary policy," said Yvan Guillemette, David Laidler and William Robson in a research paper entitled "The real reasons for the Canadian dollar's power trip -- and what not to do about it." By lowering the Bank of Canada's overnight rate and promoting faster money and credit growth the central bank would provide exchange rate relief that would be welcome to exporters. However, the benefit would soon be offset by rising costs and higher inflation, "and 12 years of hard-earned monetary-policy credibility" would begin to erode, the report's authors said.