US/Canada Interest Rate PolicyBoth the US and Canadian central banks have signaled interest rate increased in 2022.
During the last week, signals have been floated that the US may raise its rates more than Canada.
If that happens, it will affect the US/CAD exchanage rate. The US dollar will strengthen relative to the Canadain dollar.
There are legitmate reasons why Canada would choose to deviate. Maybe choice is not the right word. Real estate is a much larger fraction of the Canadian economy, so Canada is much more vulnerable to economic contraction from increased interest rates.
If Canada can't keep up with US interest rate hikes, then the C$ will devalue. This is important for all Canadian producers - because it means they will get more revenue for oil sold in US$.
It is even more important for producers like OBE that have a US$ listing. There is healthy volume in OBE on the US exchange, priced in US$. OBE's share price may well benefit twice - once from increased cash flow in Canadian funds, and then again with an increased share price in C$.
Those Canadian producers without a US$ listing, won't have the US$ listing as an anchor point to keep the share price from falling in US$ terms when the Canadian dollar declines.