Thursday , 17 August 2017


Canadian Dollar Declining – What Are the Ramifications?

The Canadian dollar is at its lowest level versus the American greenback in nearly Canadian dollar loonietwo years and that’s good news for the Canadian economy. Here’s why.

So writes Nevil Hunt (www.theloop.ca) in edited excerpts from his original article* entitled  Yay! The loonie’s value is dropping,
 [This post is presented by  Lorimer Wilson, editor of www.FinancialArticleSummariesToday.com and www.munKNEE.com and the FREE Intelligence Report newsletter (see sample here – register here) and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]

Hunt goes on to say in further edited excerpts:

Vacationers and cross-border shoppers may not like it, but a lower Canadian dollar could mean an economic boost for jobs here at home.

The Canadian dollar is now worth about 95 cents U.S., and some so-called experts say it could drop to 90 cents by the end of the year, while others predict a rebound to 99 cents. Of course, they’re dreaming if they think they can really predict how currencies will move. Even if we can’t know for sure that the loonie will drop further, however, we should hope it does.

A strong Canadian dollar may provide instant gratification but a weaker loonie [to you non-Canadians that is what we refer to the Canadian dollar as because of a picture of a loonie – a water fowl – on the reverse side of the Canadian $1 coin. Yes, America, Canada has replaced its $1 & $2 bills with coins] delivers economic development in a number of ways.

Short-term Benefits of a Weaker Canadian Dollar

The reason many of us may prefer a strong Canadian dollar is because we have to wait a little while to enjoy the benefits [of a weaker one]. All the short-term benefits of a strong dollar are fleeting. We want to head south and find bargains, and damn the long-term implications. It’s like being a teenager all over again, fighting the urge to blow that paycheque on Saturday night even though rent is due first thing Monday morning.

  • American malls fill up with Canuck [a slang term for Canadian which was originally used as a derogatory term by Americans back in the mid-1800s but is now used affectionally by Canadians in reference to themselves] shoppers [because]…a strong loonie means cross-border bargains on consumer goods.
  • More of us will travel to Disney, Vegas and other American vacation spots when our dollar is at par with the American dollar – or a little stronger – as it has been in recent years…
  • [Many Canadians have, and will continue,] to scoop up vacation or retirement homes in the sunny south at fire-sale prices, all thanks to the crash in the American housing market.

Every one of those Canadian dollars that heads south – spent on cartons of milk, big-screen TVs or condominiums – helps the American economy and ignores our own. A weaker loonie would have two positive effects in the short-term:

  1. fewer Canadian dollars being spent in the States and
  2. more American tourists vacationing here.

Long-term Benefits of a Weaker Canadian Dollar

It is the long-term benefits of a weaker Canadian dollar, however, that should have us hoping the loonie drops.

  • Like it or not, Canada lives and dies on its resources. If we are forced to price them too high – because our dollar is costly – sales drop. We don’t need to depress commodity prices too far; we just need our goods to be a little cheaper than those from competing nations.
  • A cheaper loonie also makes Canada a less expensive place to set up shop. That may mean new start-ups or more foreign investment in existing businesses, which can in turn prompt expansion and more hiring but all those kinds of investments take time.

Bottom Line

If we…[are prepared] to wait, and the loonie drops, we may no longer get…[any bargains in the U.S.] but more of us will be employed in Canada.

[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]

*http://www.theloop.ca/living/money/wallet-wise/article/-/a/2580369/Yay-The-loonie-s-value-is-dropping (© Bell Media 2013 All rights reserved)

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