http://www.bloomberg.com/?b=0&Intro=intro3

Flaherty Says Russia, China May Buy Canadian Dollars to Diversify Reserves

The Cdn. dollar briefly reached the level of $1.10 against the US currency early in 2007 , under the current conditions of endebtment it could possibly reach the same level in 2010 especialy if other countries along with Russia and China diversify their foreign reserve into Cdn. dollar .

If it were to happen the BoC will hardly be able to raise rates even if the US were to do so , in any case it should lag it's counterpart by some margin in order to protect the Canadian industry and manufacturing .

The federal government would probably also be pressured in raising deficit in order to stimulate the economy in the central part of the country through more stimulus incentives to those export oriented sectors . The green energy sector might be among them but they will surely meet strong opposition from the oil sector wich perceives them as competitors .

It should be interesting to see how this battle unfolds in our very conservative thinking country the answer probably lies within the banking sector .

Tec