Noon Rate

What Was the Noon Rate?

The noon rate was a forex term utilized by the Bank of Canada (BOC) distributing a specific case of the foreign exchange rate between the U.S. dollar and the Canadian dollar (CAD), i.e., the USD/CAD rate. The noon rate was delivered by 12:45 p.m. every day by the central bank, and depended on the weighted average in CAD trading occurring from 11:59 a.m. to 12:01 p.m. on that day.

The BOC likewise distributed a closing rate at 4:30 p.m. Effective April 28, 2017, the BOC abandoned both these rates and changed over to distributing a single indicative daily rate per CAD currency pair.

How the Noon Rate Worked

The noon rate had been widely utilized as a benchmark exchange rate by companies and others expecting to make foreign exchange estimations in USD/CAD, and was retired in 2017, replaced by a single indicative rate. The changeover to the single rate had been broadcast well in advance, permitting impacted parties sufficient opportunity to make the legitimate changes. Without a doubt, the BOC had announced in February 2016 that it would be changing its exchange rate publication methodology. The new rate mirrors a broad daily average as opposed direct in-time value of the noon rate, and is distributed at 4:30 p.m. daily.

The change in methodology was halfway prodded by the consequences of a 2014 BOC survey (which got very nearly 17,000 reactions) as well as from other broad public conferences, considering broader continuous international research into financial benchmarks. The 2014 survey had indicated that while there was inescapable utilization of the benchmark, this was not methodology-ward and users would have the option to change their processes to another methodology. The BOC likewise noticed that financial markets were considerably less transparent when it had started distributing the noon and closing rates; real-time exchange rates are presently widely available to both market participants and the public, decreasing the need to distribute time-specific rates.

Figuring out USD/CAD

The USD/CAD pair is among the most liquid and widely traded currency pairs in the forex market. The value of the USD/CAD pair is quoted as 1 U.S. dollar per 'X' Canadian dollars. For instance, assuming the pair is trading at 1.20 it means that it takes 1.2 Canadian dollars to buy 1 U.S. dollar. Albeit the USD/CAD currency pair has reached parity at various points ever, the U.S. dollar has customarily been the more grounded of the two currencies. The USD/CAD currency pair is very important as there are critical business ties and trade happening between the two nations.

Trading the USD/CAD currency pair is otherwise called trading the "loonie," which is the name for the Canadian one dollar coin.

Features

• The noon rate was a benchmark exchange rate for USD/CAD distributed around late morning every day by the Bank of Canada (BOC).
• The rate was accumulated in view of the three-minute trading activity from 11:59 a.m. to 12:01 p.m. in the forex markets in USD/CAD on a weighted average basis.
• The BOC abandoned the noon rate in 2017, which just gave a particular moment snapshot, for a more extensive single indicative rate.