The official method of payment in the North American country of Canada is the Canadian dollar (dollar Canadien in French) which is divided into 100 cents. The currency has existed since 1858 when it replaced the Canadian pound. For a long time, the Canadian dollar was not used in all of Canada but instead co-existed with smaller regional Canadian currencies. Some of these other currencies included the British Columbia dollar, the Prince Edward Island dollar, the Nova Scotian dollar, and the Newfoundland dollar.
Currently, the Canadian dollar is the fifth biggest reserve currency, accounting for about 2% of all global reserves.
The Canadian dollar has many nicknames and is abbreviated with the dollar sign $. To distinguish it from other dollar-currencies the Canadian dollar is sometimes written as Can$ or C$. Its official ISO 4217 code is CAD.
One of the most common nicknames for CAD is “loonie” due to the loon that’s printed on the $1 coin. For the French speaking population of Canada, the currency is referred to as huard or piastre.
The Canadian dollar is sometimes also called a “buck” just like the currency in neighboring United States.
Similar to most countries in the world, the currency in Canada is based on decimals and it’s divided into 100 cents. The currency exists in the following physical bills and coins:
- 5 c – The 5 cent coin is often called a nickle and it has a beaver printed on it.
- 10 c – The 10 cent coin has the famous fishing and racing schooner Bluenose printed on it. The coin is usually called a dime.
- 25 c – The 25 cent coin is called a quarter and has a caribou printed on the back.
- 50 c – The 50 cent coin is either called a 50 cent piece or a half dollar. It is printed with the Canadian coat of arms.
- $1 – The 1 dollar coin in Canada is called a loonie thanks to the loon that’s printed on it. The name loonie is also used as a slang for the currency itself.
- $2 – The 2 dollar bill is called a toonie (two loonies) and comes in two different versions, both printed with a polar bear on the back.
Note that all Canadian coins have Queen Elizabeth II printed on the front.
- $5 – The 5 dollar bill in Canada is printed with Sir Wilfrid Laurier on it.
- $10 – The Canadian 10 dollar bill has John A. Macdonald, the first Prime Minister of Canada, printed on its front.
- $20 – The Canadian 20 dollar bill is covered with a portrait of Queen Elizabeth II.
- $50 – The 50 dollar bill in Canada has the former Canadian Prime Minister William Lyon Mackenzie King printed on it.
- $100 – The highest denomination in Canada has a portrait of Robert Borden on it.
The latest series of the Canadian dollar bills was launched in 2011 and is called the Frontier Series. The new bills all have a brand new design and added security features. However, in 2017 Prime Minister Justin Trudeau announced that a new version of the Canadian dollar would be released in 2018, only seven years after the latest update.
History of The Canadian Dollar
In 1841, the first Canadian currency was created for a small part of the country called the Province of Canada. The new currency replaced the British pound and its value was based on the Halifax rating. Later on in 1858, the Province of Canada was forced to revalue the currency and at the same time adopt a decimal system.
Up until 1867, Canada was divided into several separately governed provinces all ruled under the British crown. That all changed when three of the Canadian colonies decided to unite in a federation called the Dominion of Canada. They used a currency called the Canadian dollar which has been the framework for the country’s modern currency. The new Dominion later developed into the country we all know today.
The Canadian Dollar Today
The Canadian dollar is the fifth largest reserve currency in the world. It was the sixth most-traded currency on the foreign exchange market in 2016. There is no doubt that the Candian dollar is one of the most influential currencies on this planet.
Due to its role as a reserve currency, the Canadian dollar has been an important part of British, French and Dutch Caribbean state economies for the last few decades.
The Icelandic economy was destroyed after the 2008 economic crisis that heavily affected both Europe and North America. In 2012, after a long struggle to regain some strength on the market, the government of Iceland considered adopting the Canadian dollar as their currency. The idea was that the introduction of a more stable currency would help the small island nation recover. However, the plan was never put in motion and Iceland is still using its own currency today.
Canadian bills and coins are accepted by some businesses on the American side of the border between the two countries.
Trade with the Canadian Dollar
Canada has an impressively stable political and economic situation which means that the currency is a prime option for all kinds of trading and investments. The Canadian dollar exchange rate can also be used as an indicator for what’s about to happen to the value of other currencies, especially the United States dollar. This means that experts usually focus on the Canadian exchange rate in order to plan investment strategies for other currencies.
Being the fact that the Canadian dollar is so strong it is not uncommon to see it being traded with the majority of the world’s currencies. The three most common choices are:
CAD/USD – is by far the most popular currency pair for Canadian investors. Almost 80% of Canada’s total export goes to the US and more than 50% of their imports come from the US, so it is quite obvious why the interest is so high.
CAD/GBP – is another popular currency pair and it has been for a long time. Canada is still ruled under the British Crown and the two economies have always had a close relationship which entails perfect investment possibilities.
CAD/EUR – is often traded by people from all over the world thanks to the two regions stable economies and influential currencies. The Canadian dollar is for many considered an alternative to the American dollar.