Noon Rate

AAA

DEFINITION of 'Noon Rate'

A term used by the Bank of Canada to describe the foreign exchange rate between the U.S. dollar and the Canadian dollar. The rate is released by 12:45pm EST by the Bank of Canada on any given day, and is based on the trading that takes place from 11:59am to 12:01pm on that day.

The noon rate is often used by companies as a benchmark for translating financial statements.

INVESTOPEDIA EXPLAINS 'Noon Rate'

For example, if a Canadian company has operations in the U.S., it can use the noon rate as the benchmark exchange rate for translation purposes.

When accountants consolidate a company's financial statements, they will need to convert the U.S. dollars from U.S. operations into Canadian dollars which, in this particular example, will be done by using the noon rate quoted on the balance sheet date.

Some companies believe that the noon rate is a better measure of currency translation, because all of the trades they make in the FX market take place during the business day, and not at the end of the day.

RELATED TERMS
  1. Temporal Method

    A method of foreign currency translation that uses exchange rates ...
  2. Forex - FX

    The market in which currencies are traded. The forex market is ...
  3. Consolidated Financial Statements

    The combined financial statements of a parent company and its ...
  4. Translation Risk

    The exchange rate risk associated with companies that deal in ...
  5. Current Rate Method

    A method of foreign currency translation where most items in ...
  6. Translation Exposure

    The risk that a company's equities, assets, liabilities or income ...
RELATED FAQS
  1. How does the law of supply and demand affect monetary policy in the United States?

    The law of supply and demand affects monetary policy in the United States through the adjustment of interest rates. Interest ... Read Full Answer >>
  2. What nations other than the U.S. have risk-free interest rates?

    Countries other than the United States that have risk-free interest rates are Canada, the European Union, Japan, the United ... Read Full Answer >>
  3. Where did the term 'pip' in currency exchange come from?

    The term pip is an acronym for percentage in point or price interest point. It measures a unit of change within a pair of ... Read Full Answer >>
  4. How does a government raise the economy's money supply?

    The government can raises the money supply by loosening money or the reserve requirement for banks. Both actions work to ... Read Full Answer >>
  5. How does LIBOR compare to the Federal Reserve rate as an accurate indicator?

    The question sometimes arises between analysts as to which rate is more accurately predictive of future interest rates and ... Read Full Answer >>
  6. How do interest rate changes affect the profitability of the banking sector?

    The banking sector's profitability increases with interest rate hikes. Institutions in the banking sector such as retail ... Read Full Answer >>
Related Articles
  1. Options & Futures

    A Primer On The Forex Market

    Moving from equities to currencies requires you to adjust how you interpret quotes, margin, spreads and rollovers.
  2. Forex Education

    The New World Of Emerging Market Currencies

    Take advantage of foreign currency markets without stepping out of your house.
  3. Forex Education

    Forex Tutorial: The Forex Market

    In this online tutorial, beginners and experts alike can learn the ins and outs of the retail forex market.
  4. Investing

    Fundamentals Of How Canada Makes Its Money

    In terms of industry, Canada is best known for oil and gas production, but the second largest country in the world has quite the diversified economy.
  5. Economics

    A Risky Maneuver To Jumpstart Japan's Economy

    Japan's government and the Bank of Japan are buying large amounts of government bonds in an effort to spark economic activity, but there are great risks.
  6. Bonds & Fixed Income

    Understanding Negative Rates Of Europe's Central Banks

    We are currently seeing negative central bank deposit rates and government and corporate bonds with negative yields, but there are investors buying into these securities. Why?
  7. Mutual Funds & ETFs

    How To Start A Hedge Fund In Canada

    Would-be hedge fund managers in Canada need to understand the laws and regulations that must be followed in order to start a fund in the country.
  8. Economics

    Benefits From A Tango Of China-US Trade and Debt

    China has been accumulating US debt for many decades. Here's why it continues to do so, and the risks and benefits of this for both the US and China.
  9. Chart Advisor

    Is Now the Time to Invest in North America?

    Bullish chart patterns across the North American markets suggest that now might actually be a wise time to allocate closer to home.
  10. Forex

    Understanding Currency Carry Trade

    A currency carry trade is a long-term investment strategy used primarily by large institutional investors. The purpose is to make a profit over time from differences in interest rates between ...

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center