But then it began to spill over into other sectors through supply chains and lower consumption spending as workers were laid off. In this context, and in anticipation of the spreading fallout, the Bank lowered interest rates to help buffer the economy and keep inflation aimed at our target. The depreciation of our currency is a natural part of the process.
It does several things at once. First, it offsets a part of the drop in commodity prices, which are usually priced in U.S. dollars. In other words, Canadian-dollar revenues for commodity exporters fall by less than U.S. dollar revenues. Second, the depreciating dollar boosts Canadian-dollar revenues for exporters of other goods, which are also often priced in U.S. dollars.