Travel and Your Canadian Dollar
Travel and Your Canadian Dollar
Canadians have been so long with a dollar worth only pennies in exchange for US currency or the Euro, it almost goes against the grain to think about how to use the high dollar to our advantage. In early 2002, the Canadian dollar sank to less than $.62 against the American dollar. But our economic recovery has surprised pretty much everyone (even us!) and even our finance minister has said that the high value of the Canadian dollar is likely here for a while. So what are the advantages and disadvantages to the all-time high our currency is enjoying?
First, traveling in the US may or may not be cheaper. But with a Canadian dollar more or less at par, it becomes possible for many more Canadians. Instead of adding 30% or more to the cost due to exchange losses, visiting the US can at least be considered as a vacation destination. There are a few things to remember, though, if you plan a trip south.
Retailers more than a few hours across the border generally won’t accept Canadian dollars. Even if they do, they’ll not likely give you the current exchange rate. If you revert to your credit cards, you’ll still lose on the exchange (although not as badly as when the Canadian dollar was worth much less) and get dinged big time service fees as well. The best way to save with a high Canadian dollar is to make sure you exchange your money in to US funds at your bank before you head south. Then pay as much as you can with cash. For example, reserve your rooms with your credit card, but pay in cash.
Once in the US, of course, many products can cost much less. So take advantage of the buys and look for great deals, especially on clothes, books, some electronics, and if you’re buying really big, even vehicles. Even if the prices are no cheaper, sometimes the biggest bonus of shopping south of the border is selection and quality-both are nearly impossible to match in the much smaller Canadian market.
Traveling to Western Europe and the EU nations, however, is a different story. Europeans are well accustomed to dealing with all kinds of currencies, and give much better exchanges. The dwindling Euro means Canadian dollars can go a long way this year if you’re traveling abroad-right now one Euro will cost you about .29 Canadian, about 40 cents less than this time last year.
Not all EU countries will take your Euros-England and Switzerland, for example, don’t take Euros at all, even though they’re member nations. So before you
Hitting Par: The Canadian Dollar vs The American Dollar
Hitting Par: The Canadian Dollar vs The American Dollar
In over 30 years, since November 1976, the US dollar and Canadian dollar have not been par until now. As the Canadian economy has been progressing over the years, the US economy seems to have fallen behind with all its turmoil. The war in Iraq has not helped the US economic situation but rather offset the deficit, and in a move to avoid the forecasted economic recession due to the credit crunch, the feds cut interests rates by 0.5 points to 4.75 percent.
The move to cut interest rates to ease the mortgage industry has weakened the US dollar against foreign currency including the Euro, and giving the push for the Canadian dollar to hit parity with the US dollar. One US dollar now buys one Canadian dollar. But the Canadian dollar’s gain isn’t only linked to the US federal interest rate cut, but can also be seen as the Canadian economy has been booming in an upward gain from 2006 with a low inflation rate, and a red hot oil industry.
This rapid progression of the Canadian dollar against the US comes as a shock to some Canadians, who measured the Canadian dollar value at .62 USD only four years ago in 2002, and now hitting par seems too good to be true.
As Jeff Rubin, chief economist and strategist at CIBC World Markets, stated, “the Canadian economy that once used to be the sleepy little resource backwater of the North American economy is certainly turning the tables on its big brother in a hurry.”
So what does all this have to do with Canadian and American dealings with each other? Well, for starts there will be an increase in American exports as buying from the American markets will become cheaper for Canadians. Although, vice versa Canadian exports to America will also decrease, as it will simply cost more for Americans to buy Canadian manufactured goods.
The Canadian tourism industry will also suffer, as more American visitors will decline as the dollar parity discourages Americans from shopping in Canada, since the one time savings of up to 40%, due to the dollar value, will no longer be available to Americans.
Although, Canadians will suffer in sales, they will gain in purchasing from American based businesses, and buying cars from the American side is becoming more attractive to some Canadians. As car prices in Canada are much higher than in America, a lot of Canadian shoppers will find drastic savings by traveling south of the border to
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