Spring is in the air and the loons are flying high. No, I’m not speaking of the birds, but our Canadian dollar – the loonie. Our Canadian dollar is valued at roughly the same as the US dollar.
Certainly, many cross-border shoppers see this as good news, but don’t just jump into your cars yet.
As the world’s demand for these resources rise, particularly from booming economies like China and India, they need more loonies to purchase these commodities, driving up its value.
In addition, Canada’s currency is seen as a safe haven given our strong banking system and our government’s sound financial position, compared to other major countries.
Thus, a high dollar is a sign of the strength of our economy.
Canadian companies that buy supplies or machinery from the US benefit from the rise in the dollar because it improves their buying power.
Similarly, our stronger dollar makes imports more affordable, reducing the costs for consumers on much of what we purchase that comes from abroad.
Canadians planning trips to the US, online shoppers, and yes those heading across the border will see their money go further.
On the flip side, companies that export products, particularly our manufacturers, will see their profits shrink every time the dollar rises. This will impact investments and jobs, unless the losses can be recouped by productivity gains and innovation.
And just as its cheaper for us to travel south, its more expensive for tourists to come to Canada, so we will see an impact on our tourism sector heading into the summer months.
So before you think of jumping in your car or planning a trip south, I encourage you all to spend your loonies and take your vacations, here at home.
Sheldon Leiba is the President & CEO of Mississauga Board of Trade, Mississauga’s leading business association. Mississauga Board of Trade represents businesses in all industry sectors. Visit www.mbot.com.