Ho-hum: Another day, another 68-and-a-half cents. While your attention was diverted elsewhere, perhaps by Bill Clinton's latest sexual misadventure, the Canadian dollar has been setting new lows of another kind. It is now worth less, in terms of its American counterpart, than at any time in its 140- year history, having lost more than 6 per cent of its value in less than four months Yet the story has been consigned for the most part to the business pages, with none of the sense of crisis that attends a run on the currency in other parts of the world. Were we living in Asia, or the European Union, we would be talking of nothing else. Interest rates would have shot up to double digits. The stock market would be a smoldering ruin. The cabinet would be holding midnight meetings.

We have avoided such dramatic events for one very good reason: where other countries have attempted to nail their currencies to a fixed exchange rate, the Canadian dollar is free to float. Or, as the case may be, to sink.

Rather than throw massive national resources into a futile battle with the currency markets to defend a particular exchange rate, Canadian policy is to accept their collective assessment of what a Canadian dollar is worth.

Nonetheless, fixed exchange rates have their advocates, for whom the volatility of floating currencies is at best a distraction, at worst a threat to national sovereignty. To be sure, exchange rates often overshoot their long- run value, causing havoc in trade and financial markets. Yet fixed exchange rates, whatever relief they may seem to offer, face an intractable problem of credibility.

Either, that is, they are really and truly fixed, or they are not. If they are, then there would seem no reason not to abolish national currencies altogether, and move to a single unit of exchange, as Europe is doing. But if they are not, if there is always open the possibility of a revaluation, then they will inevitably fall victim to periodic assaults by currency speculators. The result is usually a far more wrenching adjustment than if the currency had been left to find its own level.

Merely fixing rates, then, is an unsatisfactory half-way house, offering neither the flexibility of floating rates nor the predictability of a single currency. Tied to a specific external value, what is more, the dollar is cut adrift from its proper moorings, measured by its purchasing power in the domestic economy. If the central bank is required, as its first priority, to aim to maintain value of the dollar against the greenback, it cannot also aim to maintain price stability at home.

And, indeed, there are times when one would prefer that exchange rates should be free to adjust, where warranted by changes in underlying economic conditions. This is just such a time.

This will annoy those who see in the dollar's drooping posture an insult to our national manhood, the consequence, if not the cause, of a long period of economic decline. Like fixed-rate advocates, the strong-dollar lobby has a point -- up to a point. As Canada's productivity growth has lagged behind that of the United States, it has taken a cheaper and cheaper dollar to keep our trade sector competitive. And the more that we have relied upon the easy fix of a cheap dollar, the less incentive there has been for Canadian firms to take the hard steps needed to improve their productivity.

But Canada's economy did not suddenly become 6 per cent less competitive in the last four months. Indeed, it is hard to see the dollar's latest swoon as an indictment of Canadian economic policy, when all the usual predictors of a currency crisis -- large budget deficits, high and rising inflation -- are pointing in the other direction.

The paradox is resolved if we remember the distinction between a real and a nominal devaluation. The latter is what we get if we simply print a lot more dollars: whatever temporary reduction in export prices may result is soon offset by rising domestic inflation. But the present case looks more like a real devaluation: that is, it reflects actual changes in prices on world markets of the things Canada buys or sells.

The drop in the dollar since early October coincides neatly with the collapse in the price of gold and other commodities, owing in large part to the Asian financial crisis. Since Canada is a major commodity exporter, it's quite appropriate that the dollar should also decline: so far as the value of our exports of these goods falls, so will the demand for Canadian dollars with which to pay for them. But a cheaper dollar makes our other exports more competitive. So the decline in commodity exports can be made up out of increased sales of manufactured goods.

Sure, we all feel a little poorer when the dollar is cheap: imports cost that much more. But that's the reality: for a commodity exporter, falling commodity prices mean a real loss of national wealth. The dollar is only the messenger.