Clearly, there is a strong correlation between the record-high commodity prices we see globally and the rise of our dollar. Now, I say “correlation”, not necessarily “causation”. Energy prices, particularly, but also mineral prices for base metals, for example, are very important in the Canadian setting, given our large export-oriented mining industry.
I don't think there's any automatic reason why a country's currency should go up just because the price of a small portion of our exports should go up as well. This is where I think we can't take that link for granted; we have to think through exactly how it's happening. It isn't inevitable. I believe both the government and the central bank could take measures that would insulate our domestic economy against the unanticipated side effects of that unduly rapid appreciation.
From the federal government's point of view, I think that would involve limiting some of the takeovers and perhaps finding other ways to channel the resource rents generated by the energy and minerals industries into directions that wouldn't have such an impact on our dollar.
So while the two are correlated, I wouldn't take it as inevitable that high world commodity prices inevitably mean we have a high currency.