NEWS / Foreign Exchange

Abitibi-Consolidated CEO wants stable Canada dollar

MONTREAL - John Weaver, chief executive of Abitibi-Consolidated Inc. (A.TO: ), the world's second-largest newsprint maker, believes the Canadian government should rein in the rapidly strengthening currency.

"It doesn't make sense to me that the dollar should change 10 percent three years in a row," Weaver told reporters ahead of the company's annual meeting on Tuesday.

The Canadian dollar has climbed some 44 percent from a value of about 63 U.S. cents in early 2002 to a 28-year high of 91 U.S. cents, considerably raising domestic exporters' production costs.

On Tuesday morning, the loonie hit its highest against the greenback since January 1978, driving to C$1.0988 to the U.S. dollar, or 91.01 U.S. cents.

A rising Canadian dollar hikes domestic manufacturing costs and raises the prices of Canadian exports, making them less competitive in international markets.

The pain has been particularly acute in Eastern Canada's manufacturing industry, and across the country in the export-oriented forest products sector.

Weaver said he wants Ottawa's monetary policy to favor stability in the Canadian dollar, which would allow manufacturers and exporters to better plan for currency changes.

"It think it's sort of short-sighted on the Bank of Canada and the government's part to squeeze the manufacturing industry as much as they have had," Weaver said.

"It's the rapid movement of the dollar that puts us off. It's not the fact that it's going up."

Weaver, who is also president of the big newsprint, commercial paper and lumber producer, said the surge in the Canadian dollar against its U.S. counterpart, and other factors such as higher fiber and energy costs and U.S. duties on softwood lumber, have eroded Abitibi's cash generation by C$1.8 billion ($1.6 billion) since 2001.

About 76 percent of Abitibi's Canadian production is sold in U.S. dollars.