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Loony continues to haunt global forest and paper industry

According to a report by Canadian Press, the Canadian dollar will be a large determining force in the credit rating…

According to a report by Canadian Press, the Canadian dollar will be a large determining force in the credit ratings of Canadian paper and forest products companies in 2006, Moody’s Investor Service confirmed.

“Should the U.S. dollar continue to depreciate, rating pressure on companies with a significant proportion of their operations in Canada will increase,” CP reported Moody’s as writing in a report on the global forest products industry.

“Similarly, as the Canadian dollar appreciates relative to the euro, the competitiveness of Canadian companies versus companies whose costs are denominated in the euros will erode.”

The report, which was made public on March 13, confirmed the global paper and forest products industry is looking at another difficult year, with negative credit ratings while companies work to make structural alterations.

The report further indicated that market pulp, communication paper and packaging paper will come up against the most challenges, due to shrinking demand in mature markets, compounded by production in developing countries.