Of course, higher commodity prices also contributed to GDP growth during this period. Thus, the improvement in the terms of trade indirectly raised GDI through this channel. 3  The changes in our terms of trade fuelled the increase in demand for Canadian dollars through two channels in particular.
Firms that sold their Canadian-produced commodities on world markets were paid in U.S. dollars, some of which they used to purchase Canadian dollars to pay for wages, dividends, inputs and capital expenditures. In addition, higher commodity prices increased foreign investor interest in the securities of Canadian firms, most of which are denominated in Canadian dollars.