2. In small type also: " the Bank estimates that commodity prices account for roughly half of the appreciation of the Canadian dollar since 2002 the remainder of the appreciation is in line with the broad-based depreciation of the US dollar" 3. "Canadian firms should also be more inclined to invest, since the lower value of the Canadian dollar is boosting both activity and profitability in the export sector" 4. "The depreciation of the Canadian dollar in the past year is also expected to exert some upward pressure on inflation. The lower profile for inflation relative to October mainly reflects the Bank's assessment that the effects of heightened competition on inflation will be more widespread and persistent than previously assumed." 5. "while prospects for the global economy have improved and the Canadian dollar has depreciated in the past year, the base-case projection is conservative in assuming that only a small portion of this wedge will dissipate over the next two years. However, with the performance of exports still disappointing, there is a risk that the growth rate of exports will continue to fall below that of foreign activity in coming years. This could reflect more intense competitiveness pressures or an inability to respond rapidly to increases in demand, given the reduced production capacity in some export sectors." Alan Ruskin Alan Ruskin Managing Director FX Strategy (Embedded image moved to file: pic29759.gif) Tazia smith Director I Key Client Partners - US Deutsche Bank Securities Inc Deutsche Asset & wealth management 345 Park Avenue, 26th Floor New York, my 10154 Tel. +1 (212) 454-2889 Fax +1 (646) 257-3131 Mobile +1 (917) 327-4107 Email tazia.smithOdb.com (Embedded image moved to file: pic29724.gif) CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0 123251 CONFIDENTIAL SDNY_GM_00269435 EFTA01461293