Explaining the Canadian-Dollar Effective Exchange Rate Index (CERI)

Note to whoever’s going to edit this, it looks like the Canadian Exchange Rate Index (CERI) isn’t a thing anymore, and has been replaced with the CEER

https://www.bankofcanada.ca/rates/exchange/ceri/

In October 2006, the Canadian-Dollar Effective Exchange Rate Index (CERI) replaced the C-6 index. It became Bank of Canada’s new calculator in determining Canada’s currency value. This value is measured against the value of its key trading partners.

Since the CERI calculations are based on multilateral trade weights, it also takes into account trade in both goods and services. Because it also factors in non-energy commodities, it also has more recent trade data than the C-6 index. The C-6 index used bilateral trade-weight determinations based on merchandise trade.

The CERI is an important tool because it reflects more recent trends in Canada’s international trade relations. This includes increased dealings with China and Mexico, for instance. It also shows declined dealings with Japan and Europe. And it takes both direct and third-market contests into consideration. It also means a clearer outlook on Canada’s position on the world trade front.

The U.S. dollar assigns significant weight in each and every index. The CERI also monitors the path of the Canadian dollar on U.S. excluded sub-indexes.

Foreign Currencies under the Canadian Exchange Rate Index

The CERI includes six foreign currencies. These are of the countries and economic zones where most of Canada’s international trade happens. These are the U.S. dollar, the European Union euro, the Japanese yen, the U.K. pound, the Chinese yuan and the Mexican peso. Because so many currencies are involved, the International Monetary Fund publishes the CERI.

Table A shows the weight and importance each of these currencies has held. The table starts from 1996 to the present date, as shown in the CERI. For more information on the CERI see:

• Bank of Canada Review article; or
• Monthly CERI data are available by day, or weekly, in the Bank of Canada’s Summary of Key Monetary Policy Variables chart.