Emerging Trends
The most popular transactions since the middle of October have been for clients to exchange from USD into CAD and JPY into CAD. With the financial crisis negatively affecting investor confidence and the rapid losses in the equity markets, the USD gained about 25% on the CAD within 3 weeks.(Oct. 4 - 24) The JPY gained about 35% during the same time. The CAD is somewhat reliant on the price of oil which has fallen from $142 in June 2008 to $42 on Friday Dec. 5. A lower oil price is better for Japan and the U.S., helping to reduce manufacturing and shipping costs. The previous high for Japanese yen was on Dec. 22, 1999 when it reached 68.78 yen per dollar. On November 6, 2007 the CAD/JPY rate was 123.88. Essentially, the Japanese yen gained 77% on the CAD in less than one year!
Many of our clients had been holding yen in their safety deposit boxes for many years. Because Japanese yen basically earns 0% interest when held in a bank account, these past few months have provided yen holders and excellent opportunity to 1.) take advantage of a good exchange rate for CAD, USD, EUR, GBP, and AUD 2.) invest in the equity markets ie. TSX has fallen by more than 35% from its peak earlier this year.