Canada is the tenth largest economy in the world. It borders the world's biggest economy, the United States. Notably, both Canada and the United States refer to their currency as dollars. However, their currencies are not the same.
The exchange rate fluctuates, but generally the Canadian dollar (CAD) is slightly less valuable than the American dollar. The dollar is divided into 100 cents locally referred to as the penny. However, the Canadian penny was removed from circulation because of its low value. The image on the one-dollar coin is the loon, and the locals refer to the coin as the looney. The CAD is the fifth most reserved currency in the world because of the country’s stable economy, and strong sovereign position. It is estimated that about 2% of the world's currency reserve is held in Canadian dollars.
History Of The Canadian Dollar
In 1841, Canada’s currency was referred to as the Canadian pound and was worth four US dollars. The imperial government in London imposed the pound in all its colonies but the local population to assimilate their currency with the US because of their close trade ties. Between 1841 and 1871, several alignments were conducted to streamline the Canadian pound, the sterling pound, and the American dollar. In 1871, the Canadian Parliament passed an act that created the Canadian dollar, during the Second World War, the exchange rate was C$1.10 = US$1.00. In 1960 the value of the currency dropped significantly before it was pegged in 1962 at an exchange rate of C$1.00 = US$0.925.
Six denominations of currency circulate as coins in Canada. They are the 5¢ (nickel) 10¢ (dime), 25¢ (quarter), 50¢, $1(loonie), and $2 (toonie). In 2012 the production of the 1¢ (penny) was discontinued due to inflation that made its production costs higher than its value.
The Royal Canadian Mint produces the coins. The circulation of the 50¢ is lower than the other coins; it is estimated that for every one 50¢ coin produced, 142 25¢-coins are produced. There is a similarity between the Canadian coinage currency and the American coinage particularly those below 50¢ regarding size. Some U.S coins circulate in Canada at par while Canadian coins below 50¢ circulate in the US because of their similarities.
Today the Canadian banknotes are issued in denominations of $5, $10, $20, $50, and $100 denominations.
What is the Currency of Canada?
The official currency of Canada is the Canadian dollar.
About the Author
Victor Kiprop is a writer from Kenya. When he's not writing he spends time watching soccer and documentaries, visiting friends, or working in the farm.
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