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Loonie trades above US$1.10 amid fears and calls for a pull-back
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by Ray Keating | November 7, 2007 at 03:20 am
663 views | 52 Recommendations | 7 comments
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The loonie continues to climb and is now at levels not seen in over 100 years, but still, Canadians pay more for goods and services than our American neighbors. Clearly the most noticeable items are books, magazines and greeting cards since they have separate prices listed for Canadian and American purchasers but one doesn't have to dig too deep to see impacts in other areas. A <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Newfoundland couple is suing American car makers over their refusal to sell them a new vehicle in Maine, potato farmers in PEI are seeing impacts on their US markets and manufacturers in Canada are squirming. Where will it go from here? Consumers love the high dollar... but does the buying power come at the expense of our greater economy?
The loonie broke through yet another psychological barrier on Wednesday.
The Canadian dollar has breached the US$1.10 mark in after-hours trading, hitting 110.02 cents US. The loonie's rise is raising alarms that the rapid acceleration is both unsustainable and damaging to the economy.
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ryan
Vancouver, Canada
Ray Keating
Charlottetown, Prince Edward Island, Canada
Most RecentMost Recommended Comments (7)
at 04:49 on November 7th, 2007
Ray Keating, you've convinced me you've done the work - it's authentic. I also think that you've been fair and thorough.
Interesting times we live in, that's for sure!
at 05:03 on November 7th, 2007
Our local film industry is just hating this! Not enough homegrown production to provide even the relatively small amount of work that we've grown used to without "tourist" produtions from south of the border...
at 08:06 on November 7th, 2007
Psychological barrier indeed. Thanks for this.
at 08:46 on November 7th, 2007
I do not think US Citizens living on the border are ready for the shock. I wonder if Canadian border restaurants and pubs will take the US dollar at par much as US Business did when the situation was reversed?
at 08:52 on November 7th, 2007
Funny thing, I was looking at my paypal account yesterday and I was confused about the discrepancy between my balance (in US dollars) and a transfer made to me (in CA dollars). I forgot the loonie is worth more for a second :P
at 11:17 on November 7th, 2007
It really is astonishing to see the loonie at these levels.
at 12:29 on November 7th, 2007
Good frame and good points. Consumers love the purchasing power, but it comes at a heavy (at times) cost to producers. Canadian purchasing power of foreign goods is strong, but the export business is going to feel the pinch (if it has not already).
For those that are confused: for countries with large amounts of exportable goods (meaning, they sell their goods to other countries), it is better for local currency to be worth less than the value of the currency in the country buying the goods. This makes the exported goods more competitively priced. In the current situation, it now costs the U.S. *more* to purchase goods from Canada; so the U.S. will either purchase less or try to find an alternative (in some cases).
Good stuff.