Q:

What was the average exchange rate of Canadian dollars to U.S. dollars in 2014?

A:

Quick Answer

In 2014, the average exchange rate of Canadian dollars to U.S. dollars was about 0.905912 Canadian dollars to $1 U.S. Currency exchange rates change frequently and are influenced by a number of factors.

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Full Answer

Inflation rates play a significant role in determining exchange rates. Countries with lower inflation rates have higher purchasing power than those with high inflation rates, thus raising the value of those countries' currencies. However, high interest rates raise the value of a country's currency, because foreign investors are willing to put money into that economy to receive a higher return on their investments. Economic status also influences exchange rates. Recessions typically depreciate a currency's value because interest rates fall.

Government debt also impacts the value of a country's currency. If there is fear that a country may default on its debts, investors may sell their bonds, thus causing the currency value to depreciate.

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