Although some of the short-term movements in the exchange rate may have been excessive, such as the run-up to $ in November 2007, on balance Canada’s flexible exchange rate has helped to cushion the economy on the way up and on the way down – an appreciation followed by a depreciation.
Fiscal authorities at the federal and provincial levels also acted responsibly in the years preceding the “bust” of late 2008 and early 2009, taking some of the edge off the boom and leaving adequate fiscal headroom when extra stimulus was required.