Personal Finance

Falling Canadian Dollar

The Canadian dollar has been plunging recently.  I’m not into Forex trading (its a zero-sum game, so with transaction fees and other savvy people in the marketplace, I don’t see it as a reliable investment), but currency exchange rates affect many Canadians.

Years ago I lived in the US and the Canadian dollar was worth about $0.60 US.  Things seemed much cheaper whenever I’d visit Canada (I remember being shocked at how much more DVDs cost up here after I’d factored in the exchange rate).  When we briefly had the dollar worth more than the American dollar (and while it was around parity), it was a strange feeling being able to purchase more for a Canadian dollar (or to be able to convert equally).  I think a lot of ex-pat Canadian tech workers were shocked at their American salaries, in part because they were very nice after being exchanged into Canadian dollars.

For importers, they now have to pay a lot more when they buy abroad.  This will eventually start translating into higher prices on goods brought into Canada (books, most manufactured goods, etc).  With the lower Canadian dollar, exporters will now be able to make more for everything they sell abroad, so this is good news for Canadian manufacturers and anyone selling resources outside of Canada.

Tourism will get more expensive when we travel outside of Canada, but tourists COMING to Canada will get a better deal (so hopefully this segment of the economy will improve).

Those of us who own American stocks: we’ve just got a nice boost to our portfolio value.  From both the new, higher exchange rate if we sell and on any dividends paid (in American currency).  Telly is going to laughing more than any of us, as she lives in Canada but works in the US (good trick right now if you can manage it).

For purchases WITHIN Canada (say buying a meal at a restaurant that uses locally produced ingredients or buying a Canadian newspaper), nothing should really change.

Has the drop in the Canadian dollar affected you?  Are you going to be living life any differently, within the next 6 months say, because of the change?

10 replies on “Falling Canadian Dollar”

Telly might start laughing – or she might stop crying because of the previously rising Canuck dollar which of course was a negative for her.

Offhand I’d say the dollar isn’t a big factor for me directly.

It’s not a huge factor for me, but certainly has some impact. When buying things online, I’m now making sure I find a Canadian source rather than US suppliers. It has also impacted my vacation choices- we went to Las Vegas last winter when the dollar was at about US$0.96 and had considered going back this year, but unless the exchange improves it’s just not as attractive a destination.

I’m paid in CAD, but work for a US based company. . . I’m loving the 30% premium, it’s job security at it’s finest. I was getting worried when we hit a buck ten, thinking they would just move the jobs local if that kept up for a long time, but now they are getting a great deal.

Mike: Yeah, its good when currency fluctuations don’t have a big impact on your life…

MDJ: Yeah, that’s funny! We made a lot of the same points too. .. “great minds think alike” or “fools seldom differ”? 😉

MGL: Hmm, that’s too bad you can’t get back to Vegas. Where might you travel instead? I’ve found Cuba a pretty affordable destination for Canadians.

Tractiatim: Yeah, all their Canadian employees just turned into the best deal around for the company, eh?

You’re right Cheap, I’m loving it but it’s still not as good as the days of $1 USD = $1.60 CAD. I’d love to see those days again. 🙂

I’ve never, nor will I now, bank on any exchange rate difference. As far as I’m concerned, any extra salary I receive from forex is considered “bonus” money. These days I’m just hoping to still have a job in the next coming months 🙁 so it’s all going towards an emergency fund which I previously never really believed in.

telly: I think that’s the right perspective, view any gains from currency fluctuations as gravy, not something to be counted on…

Sorry that things are looking so uncertain at work 🙁

Isn’t it funny? I’ll need to let FT know, after all, he wrote a post about me using a LOC as an emergency fund (opportunity cost of an emergency fund)! Not that we’ve needed to dip but I think we’d feel less vulnerable with an Emergency fund.

Good thing for that 25% bonus. 🙂 I’ve definitely learned a lot about myself over the last couple months. I’m sure I’m not the only one!

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