
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: FRIDAY, January 13, 1995                   TAG: 9501130083
SECTION: BUSINESS                    PAGE: A5   EDITION: METRO 
SOURCE: ASSOCIATED PRESS
DATELINE: TORONTO                                 LENGTH: Short

NORTH OF THE BORDER'S IN TROUBLE, TOO

The Canadian dollar is stumbling toward its all-time low, the victim of runaway debt, Quebec separatism and foreign investors dumping the currencies of countries unable to deal with their own financial problems.

Ironically, all this bad news is coming at a time when the Canadian economy is flourishing.

The Canadian dollar, which has lost nearly 20 percent of its value since November 1991, fetched 70.57 cents in U.S. currency Thursday, down 0.31 of a cent from Wednesday and pushing ever closer to the record low of 69.2 cents set in February 1986.

That prompted the Royal Bank, Canada's largest, to lead a new round of interest-rate increases, upping its prime half a percentage point to 8.5 percent in an attempt to draw investor money back to Canada. Other banks immediately raised rates as well.

The Canadian dollar and the Mexican peso are in the forefront of a big currency slide. And many investors don't like what they are seeing in Canada.

Later this year, Quebecois will vote in a referendum to decide whether they want their French-speaking province to secede from Canada. The economic implications of separation frighten foreign investors.

Equally frightening is a 550-billion Canadian-dollar debt, or $388 billion U.S. at today's rate of exchange. Add to that the debts of Canada's 10 provinces, and the figure soars to 700 billion Canadian dollars, the equivalent of $494 billion.

by CNB