October 5, 2017 / 5:21 PM / in 10 months

UPDATE 1-Canada's Morneau says recent pullback in C$ helpful for exporters

(Adds Canadian dollar movement, further Morneau comment, background)

By Fergal Smith

TORONTO, Oct 5 (Reuters) - Canadian Finance Minister Bill Morneau said the recent pullback in the Canadian dollar would be helpful for exporters, and he has a sense from meeting with private-sector economists in Toronto on Thursday that the economy will remain strong.

The Canadian dollar weakened to a five-week low of C$1.2552 against its U.S. counterpart on Thursday after domestic data showing a drop in exports for the third straight month further weakened prospects of another interest rate hike this year from the Bank of Canada.

“I think from the standpoint of exporters that situation (pullback since September) with the dollar will be helpful for them,” Morneau told reporters in Toronto.

The loonie, which had surged as much as 14 percent since May, has retreated nearly 4 percent in recent weeks after Bank of Canada policymakers said the central bank would be closely watching movements in the currency as it considers how to follow its two recent interest rate hikes.

The bank hiked rates after strengthening this year of the domestic economy, including second-quarter growth of 4.5 percent.

“My sense is that we will continue to have a positive economic situation in the coming quarters and obviously over the longer term,” Morneau said after consulting with private-sector economists as he prepares for a fall fiscal update.

The strong run of growth comes after the government ran deficits over the past two years to help stimulate the economy. The economy had been pressured by a collapse in the price of oil, one of Canada’s major exports, which finally bottomed in February 2016.

But investments by the government have now led to a fiscal position which is C$11 billion better off than the budget 2016 estimate, said Morneau.

The government’s fall fiscal update will come in a matter of weeks, he added.

Morneau also said plans for the Infrastructure Bank were on track, with the board of directors being filled and a chief executive hired. (Reporting by Fergal Smith in Toronto and Andrea Hopkins and Leah Schnurr in Ottawa)

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