With the BoC and Fed’s potential rate divergence, are Canadian depositary receipts worth a look?
The Bank of Canada and U.S. Federal Reserve may be moving toward divergent monetary policies, with Canadian rates potentially rising while U.S. rates remain steady, which could strengthen the Canadian dollar and increase interest in currency-hedged investments. This shift may make Canadian Depositary Receipts (CDRs) more attractive to investors seeking exposure to U.S. equities without the risk of currency fluctuations. Despite higher demand for U.S. stocks among Canadians, the cost and effectiveness of hedging through instruments like CDRs remain subject to debate among financial experts.
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Open this photo in gallery:Canadian investors have remained heavy buyers of U.S. stocks, despite chills in the Canada-U.S. relationship.vtwinpixel/iStockPhoto / Getty ImagesShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountThe strengthening dollar could help raise the profile of currency-hedged investments for Canadians investing in U.S. assets, as some experts see language from the Bank of Canada and the U.S. Federal Reserve hinting at a possible divergence in monetary policy.The loonie rose more than half a per cent against the U.S. dollar on Thursday, bringing its gains for the month to more than 2 per cent. The rise came a day after the U.S.
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