Question

Moving to the next question prevents changes to this answer. destion 13 When the Bank of Canada lowers the ovemight loans rate, the Canadian interest rate differential and other things remaining the s

Answer 1

When the Bank of Canada lowers the overnight loans rate, it affects the Canadian interest rate differential and the value of the Canadian dollar.

Step-by-step explanation:

When the Bank of Canada lowers the overnight loans rate, the Canadian interest rate differential tends to decrease. The interest rate differential refers to the difference between the interest rates in Canada and in other countries, usually the United States. When the overnight loans rate is lowered, it becomes less attractive for foreign investors to hold Canadian currency, therefore decreasing the demand for Canadian dollars and potentially causing a decrease in the value of the Canadian dollar relative to other currencies.

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