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Introduction | Overview | Structure | History | Factors affecting change in exchange rates | Daily trend of Canadian dollar | Weekly trend of Canadian Dollar

Dollar is the official currency of a long list of countries and economies including the Unites States of America that is the most dominant currency among all dollar currencies. A dollar is denoted with "$" sign and has "cent" as its subunit. The Canadian dollar is the national currency of Canada as the name suggests, and stands among the most important currencies of the world. The ISO 4217 currency code for the Canadian dollar is CAD, CA representing the country name and D representing the name of the currency i.e. dollar. The numeric code of the currency is 124. It is serving as the medium of exchange in the country since 1858. Sometimes for distinguishing the Canadian dollar from the other dollar denominated currencies it is symbolized as "C$" and the Canadian cents are symbolized as "C¢".


Canadian dollar is one of the few currencies that are considered to be the benchmark for the rest of the currencies in the world. It is the 7th most heavily traded currency in the world. The Canadian dollar is popular for the slang terms that are assigned to the currency and currency units like "buck" is slang in American English that is used to refer to the currency unit, "loonie" is a name given to dollar and sometimes, to $1 coin because of design of the coin depicting a single loon, "toonie", a derivative term from the previous one used for the $2 coin etc. Also, there had been some misconceptions and myths regarding the various currency units like

  • The center of the $2 coin can be popped out.

  • The 50¢ coin is no longer minted and issued.

  • The coins are minted at Regina, Saskatchewan as the obverse side of the coin has "Regina" engraved on it

  • An American flag is depicted on Canadian paper money.

  • A new $10 series was called up because there was a misprint in the poem, which is printed on $10 notes.

All the above-mentioned examples are mere misconceptions, and are not true.

The inflation rate in context of Canadian dollar has ever been quite low helping it to gain importance as a benchmark currency. That is the reason why; it forms an important reserve currency as well and is demanded by several central banks over the world. Under the Bretton Woods system, the currencies had to fix their exchange rate but this was not the case with the Canadian dollar. It was allowed to float from 1950 to 1962 and was once, valued more than that of the US dollar. The value of the dollar fell after 1960 and it had to revert back to the fixed rate regime but then in 1970 again, the floating rate regime was adopted. Currently, 85% of the country’s trade involves trade with the United States, the Canadian dollar is unofficially pegged to the US dollar. The import and export @ less than and equal to 10000 CAD of all currencies is free and amount exceeding must be declared.


The Canadian dollar like all other modern currencies uses the decimal system and is divided into 100 parts of the sub unit of the currency that is cents. The Bank of Canada (termed as Banque du Canada in French language) manages the flow of the currency in the country as the central bank. It issues the banknotes and also performs the function of circulating the notes and coinage that forms part of the currency. The responsibility of the actual production of currency notes is outsourced by the central bank to the Canadian Bank Note Company and BA international Inc. The Canadian Royal mint has been provided with the sole authority to mint the dollar coins in Canada.

Currently the Canadian banknotes are issued in 5 denominations namely $5, $10, $20, $50 and $100. The notes bear writings in both the official languages of Canada i.e. English and French. They are of same size and are differentiated on the basis of different color schemes i.e. blue color scheme for $5 note, purple color scheme for $10 note, green color scheme for $20 note, red color scheme for $50 note and brown color scheme for $100 note. These notes also have the Braille features that help the blind people to recognize the value of the note easily. Till now, 6 series of the currency banknotes and 2 commemorative notes have been issued.

The coinage in the currency is issued for the smaller value units for 7 denominations i.e. 1¢, 5¢, 10¢, 25¢, 50¢, $1 and $2. All the coins have a common obverse side showing the engraved image of Elizabeth II and initials in French language "Elizabeth II D.G Regina" meaning "Elizabeth II, by the grace of god, queen". The reverse sides of the coins possess different symbolic images like the 1¢ coin has an image of two maple leaves on a common twig depicting the national symbol of the country, the 5¢ coin has an image of a beaver which represents the industrious image of the country, the 10¢ coin has an image of a bluenose schooner representing pride and maritime skills, the 25¢ coin shows an image of a north American caribou that is a symbol of Canadian wilderness, the 50¢ coin depicts the image of Canadian court of Arms to honor the founding nations of the country, the $1 coin, popular with the name "loonie", has an image of a loon representing the voyageur theme of the country and the $2 coin, known as "toonie" possess an image of an adult bear representing the balance and composition. The coins except the 50¢ coin are frequently used in the day-to-day operations.


The history of the first dollars in Canada dates back to the period prior to the American independence when whole of the country was colonized by the European super powers. Spanish dollar was the first dollar currency that was issued in Canada, with most of the colonies still used the £sd system of accounting. The value of the Spanish dollar was a topic of much controversy as different colonies used different ratings to value the currency. After the American war of independence, the value of one dollar was fixed at 8 shillings according to the York rating but the Halifax rating replaced it that suggested that value of the dollar equal to 5 shillings. Some banknotes in dollar and £sd were also issued at that time, the first dollar notes being issued by the Bank of Montreal in 1817.

In 1841, the newly formed province of Canada pegged its dollar at par with the US gold dollar and fixed the rate equal to 5 shillings. The £sd system of accounting was replaced by the decimal system in 1858 making the use dollar and cents instead of pounds and shillings. Somehow a few colonies still made the use of their own currency but after the passing of the Uniform currency act in 1871, Canadian dollar was adopted as a single currency as a replacement of the other currencies. During the First World War, the gold standard of the currency was temporarily given up and was completely abandoned in 1933. In 1935, the bank of Canada was established that took over the function of issuing and circulating the currency from the charted banks and the federal government.

The bank of Canada, after it was formed, has issued 6 banknotes series till now. The first one was issued right after its inception in 1935. $25 and $500 notes were issued for the first time in the history of the country in this series. The second series of banknotes was issued soon after in 1937 as some changes were to the made according to the changes in the government legislation and the death of King George V in 1936. The portraits of the members of royal family in the first series were replaced in this series with the portrait of King George VI and the former Canadian prime ministers. Both of the official languages were included on the text of the notes and color variations were adopted. The third series was issued following the Queen Elizabeth’s rise to the throne in 1952. the portrait of King George VI was replaced with the portrait of the queen and altogether a different look was adopted for the note’s design. This series became somewhat controversial as the image on the note highlighted a smiling demon behind the ear of the queen. The fourth series was issued in 1967 to introduce some new changes in the note, especially the use of multicolored tints behind the dominant color to check upon the problem of counterfeiting. Advanced security features were introduced in the next series i.e. the fifth series that was issued in 1986. The $1, $2 and $1000 were also taken out of the circulation during this period. The current series that is being used currently was issued in 2001 till 2004 with enhanced security and tactile features.

Factors affecting the exchange rates between two countries

The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case of different countries. Following are shown the common factors on which the foreign exchange rate depends

  • Flow of imports and exports between the countries
  • Flow of capital between the countries
  • Relative inflation rates
  • Fluctuation limits on exchange rate imposed by the governments of the countries
  • Merchandise trade balance
  • Rate of inflation in the country
  • Flow of funds between the countries for the payment of stock and bond purchases
  • Relative growth
  • Short term and long term interest rate differentials
  • Cost of borrowings
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