* Finance minister doesn't want to see high C$ volatility
* Watching for bubble-type activity in housing
* No plans for new mortgage rules
* Rising rates highlight need for clear fiscal policy
By Claire Sibonney
TORONTO, May 10 Canada's strong currency
reflects confidence in its economy, though sharp moves in its
value are not welcome, Finance Minister Jim Flaherty said on
"We want to avoid sudden jerky movements in the Canadian
dollar. We saw that a couple of years ago in 2007 and the prime
minister and the governor of the Bank of Canada spoke about it
at the time, discouraged speculation in the currency and the
dollar came down," he said in Toronto.
Flaherty said he didn't want to see further U.S. dollar
weakness and thought strong Canadian and U.S. currencies were
both positive for the world. But he also noted the government's
policy is to let the Canadian dollar's value be set by
"The government is not going to intervene with the Bank of
Canada unless we see some extraordinary cause like the events
that we saw with respect to the yen in Japan," he said.
The Canadian dollar last month hit its highest level since
November 2007, though it pulled back sharply as global
commodity prices crashed.
Flaherty, the longest serving finance minister in the Group
of Seven wealthy nations, also said he was keeping an eye out
for bubble-type activity in the country's housing market. But
he said he had no plans to further tighten lending rules.
"I see some softening in the market now and I welcome it,"
he later told reporters after an appearance at the Bloomberg
Canada Economic Summit.
Canada's housing market helped lead the country out of the
recent recession as near-zero interest rates spurred a surge in
prices and sales activity.
The boom worried the Canadian government enough to impose
tighter mortgage rules twice in less than a year. The latest
series, aimed at mortgage amortization and refinancing,
recently came into effect. [ID:nN17274705] [ID:nN17284967]
Flaherty's appearance came a week after the ruling
Conservatives won a crushing victory in the national election,
securing a majority that will allow them to govern without
support from smaller parties.
The finance minister said the federal budget, which failed
to pass in March, would be reintroduced in June with modest
changes. He said rising interest rates highlight the need for
clear fiscal policy.
The Conservatives pledged during the campaign to eliminate
the federal deficit by 2014-15.
(Editing by Jeffrey Hodgson)