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The Canadian dollar's effective exchange rate is projected to reach 109.5 in 2026, representing an appreciation of 5.1% from the previous year, which marked the weakest level in nearly two decades. This performance in 2026 reflects a rebound from substantial currency weakness in 2025, which was driven by widening interest rate differentials as the Bank of Canada cut rates more aggressively than the US Federal Reserve, persistent trade policy uncertainty surrounding US tariff threats that undermined confidence in Canadian assets and softening commodity prices that reduced demand for Canada's resource exports. Even after recent growth, the 2026 index level sits below the 2011 historical peak of 131.4 and below the 1990 reading of 126.1, illustrating the Canadian dollar's long-term trend toward depreciation against major trading partners.However, the Canadian dollar demonstrated surprising resilience in 2025 compared to dire predictions that characterized market sentiment entering the year. Currency watchers had braced for substantially more pain, with many analysts forecasting the USD/CAD exchange rate would breach 1.50 (equivalent to CERI levels potentially falling below 100) as trade tensions intensified and economic divergence widened. Instead, the loonie stabilized through most of 2025 despite persistent headwinds.This relative stability reflects several offsetting factors including stronger-than-expected Canadian economic data that reduced recession fears, US dollar weakness against other major currencies that limited CAD depreciation, and bargain hunting by international investors attracted to undervalued Canadian assets.The past five years witnessed significant volatility in the Canadian dollar driven by pandemic disruptions, commodity price swings and divergent monetary policy trajectories. The currency appreciated 4.6% in 2021 to 113.0 as commodity prices surged and Canadian post pandemic economic recovery outpaced expectations, then held flat in 2022 at 113.0 as offsetting forces of monetary tightening and strong resource prices balanced.
Curious about what drives these trends? IBISWorld's analyst coverage on the canadian effective exchange rate index includes detailled analysis on the current performance, outlook and industries affected.
1980-2032
The Canadian effective exchange rate index (CERI) measures the value of the Canadian dollar against a weighted basket of major trading partner currencies, using 1999 as the base year (index value of 100). This metric captures the overall strength or weakness of the Canadian dollar in international markets by weighting currencies according to Canada's bilateral trade flows, providing a more comprehensive measure of currency competitiveness than bilateral exchange rates alone. The index is compiled by the Bank of Canada using daily exchange rates and trade weights that reflect Canada's actual trading relationships.
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The canadian effective exchange rate index in Canada in 2026 was 110.26 index points.
The canadian effective exchange rate index in Canada declined by -0.49% in 2026.
IBISWorld’s data and analysis on canadian effective exchange rate index in Canada includes forecasted growth rates over the next five years.