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The buck keeps rising against the USD and, to a lesser extent, the Euro. A few minutes ago, the psychological milestone of USD parity was reached.

What's it mean for you, for the country?

Apart from obvious things like foreign travel getting more affordable and exporters (including the tourism industry) quaking in their boots, what are the implications?

I earned (=worked my ass off for) a C+ in introductory macroeconomics back in 1984, so please keep it simple.
 

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R.I.P. Marc - 01/29/2022
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Unless retailers are willing to pass on the savings, it might mean very little. Go buy a pocket book from Chapters and ask them to accept payment in US dollars, which are at par. They will tell you that the cost of the book is $9.95 US and $13.95Can.

Cheaper Apple products????

Hopefully, some grocery retailers will pass on some of the savings of US fruits. We shall see.
 

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It's disasterous for any company that seels to the US.

Since the US is a nation of consumers, and they don't really produce much, it's just become more expensive to sell to them. It will help drive the internal American economy.

For companies that buy from the US, it's great. Our money now buys more.

The US is our largest trade partner. They win. We lose.
 

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Should not have a real affect. Businesses have much overhead due to operation costs which will not be affected; salaries, hydro, rent, etc. Having said that, a mom and pop shop acquiring much of their goods from the US could pass the buck to the consumer as it is an easier task to manage.
 

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I was listening to the radio yesterday and an economist came on and said that Canadians shouldn't expect a lowering of of the prices of any goods for about 2 years since retailer don't know if the parity will last very long

sounded like a bit of spin to me

I'd hate to see retailers try and pocket this winfall

perhaps it's time to start buying more good directly from the U.S.?

and my retirement home in Mexico looks better priced everyday....
Mexican prices are U.S. dollar based
 

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Anyone who has recently bought American goods in bulk is going to want to get thier money's worth and not lose money on reselling those goods here in Canada just because the dollar has hit par. It takes time for all of the (higher priced) goods from earlier transactions to filter through the system. I agree that it's going to take some time but 2 whole years? Sounds pretty long to me.

Makes buying a new Mac all the more favourable a proposition. On the other hand, it makes it tougher for people in my business to sell our product into the American market... they'll still buy but they just might be tempted to make do with less.

So it's a toss-up... perhaps it's too soon to tell?
 

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As a net exporter, it's bad news insofar as other countries will want to purchase less of our products. The flip side of that, though, is that many of our exports are natural resources: oil, lumber, and electricity, which are things our largest trading partner cannot do without. So I like to think that the actual effect on our net exports will not change drastically - simply put, the USA cannot get any of these commodoties as easily anywhere else as they can from Canada. Kind of a captive market.

The bigger downside is that, with the dollar at par, people will (as they already have) realize that we as Canadians are getting the short end of the stick when it comes to retail pricing. And parking lots along the border will be full(er) of Canadian plates. This has a negative effect on both local retailers and on the Canadian GDP: less money is being spent in Canada. I do feel bad for retailers, who with the dollar at par are accused of ripping off customers, even though there is a long delay in how retail prices will react. If you go into a Canadian Tire store, those items were purchased at least several months ago. For example, Christmas ordering is done in the early spring, so eight months later the exchange rate has changed, but the store bought the product at a less favorable rate and cannot realistically adjust for the new rate without loosing a lot of money.
 

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Those arguments are BS, the CDN$ has been trading above $0.90 for 6 months yet most retail pricing is unchanged.

At a certain point this "retailers bought their good months ago" becomes just an industry talking point.
 

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I import from the US. When I order something from the USA I do a 'buy forward' purchase of US$ in the amount of the invoice. I may not actually require that US$ for 6-8 months, or even a year, but doing the buy forward protects me from losses due to the volatility of the currency markets. It locks in my profit at an acceptable rate.

So, yes, I'm sitting here today, with a 'buy forward' contract that I bought a couple of months ago at 1.06. The customer might bitch about how the exchange rate is better when he actually gets the equipment in a few months, but just as he (nor I) will not benefit from that, neither will I lose money should the dollar decide to drop.

By the way, I buy $US a quarter million at a time, so yes, the 6% difference would have been nice, but I also lived through a time when the dollar dropped the same amount in the same amount of time and without the buy forward I would have lost money on the transaction.

Clients I am quoting to now are getting the benefit of today's exchange rate, but they won't be charged more later if the dollar drops, as long as I do the buy forward.

That's the way I do business.

Stores with inventory would have paid a higher exchange rate for the goods currently sitting on their shelves, no matter what today's rate. And they may have done the same buy forward. It's not an uncommon business practice. That's why for consumer goods the price doesn't always reflect the daily exchange rate and it takes time for adjustments to come down the line.

You pays your money, you takes your chances.
 

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Hi,

I was pricing the Honda Element on both the US and Canada websites. I chose the same options on the same model of Element and compaired the before tax prices. About $28,000 for the US model. About $40,000 for the Canadian.

We're getting ripped off here.

s.
 

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Those arguments are BS, the CDN$ has been trading above $0.90 for 6 months yet most retail pricing is unchanged.

At a certain point this "retailers bought their good months ago" becomes just an industry talking point.
The thing is, six months is not really sufficient time for retailers to make adjustments. Nevermind that they bought months ago, but they're not going to change their pricing immediately, either. If the bottom falls out of the Canadian dollar tomorrow, and they've adjusted their prices, they're going to be skewered.

Hence why two years, while a seemingly long time, is not unreasonable. It allows everyone to see where the dollar is headed and whether this new, high level is sustainable.

In the meantime, unfortunately, yes, we get screwed. This is the one reason I would be in favour of a unified North American currency.
 

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This is the one reason I would be in favour of a unified North American currency.
Good idea in theory, but there is no may the US would make concessions when it comes to their economic policy. Attaching ourselves to a US lead economy could be truly disastrous.

Just look at the ego of the UK. They're too high and mighty to use the Euro.
 

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Even Cuba banned the US Dollar and can we look at Argentina :eek:

The loonie's not looking so loonish these days.
 

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Depends on what sector of the economy we're talking about, Spicy. I dispute the notion that it's bad right across the board. Besides, this is not so much a Canadian story as it is an American one. Our bad news pales in comparision to theirs... I'd argue it's much more of a shock south of the border.
 

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Good idea in theory, but there is no may the US would make concessions when it comes to their economic policy. Attaching ourselves to a US lead economy could be truly disastrous.

Just look at the ego of the UK. They're too high and mighty to use the Euro.
Agreed. There are many, many good reasons not to have a unified currency.

This is bad news for the Canadian economy.
This is an interesting comment, since the value of the dollar is dependent upon the economy (and, yes, the relative strength of other economies, particularly that of the USA). The dollar has been rising steadily for several months - if it were strictly bad for the economy, we should have seen a push in the opposite direction as the negative effects of our rising currency are felt. Unless you want to argue that the increase in our dollar's value is dependent entirely on the US economy.

The rising dollar does have its negatives (exports being a major one), but it also has positive implications, such as increased investment power. That means Canadian foreign investment should rise, especially if the loonie actually surpasses the US dollar (and wouldn't that be something?).

Of course, a year from now, the US dollar will rebound (if not sooner), so it will be interesting to see what happens in the interim and immediately thereafter.
 

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Of course, a year from now, the US dollar will rebound (if not sooner),
wanna bet? ;)

IF oil goes to Euro.....:eek:

The US numbers are WORSE - far WORSE than when the world pulled the plug on Argentina.

Personally I think a deflationary period would be a good thing and get back to some real value instead of the froth that's about.

It took Japan 15 years tho was marginally managed ( too many social implications )
I suspect the US is in for a generation of retrenchment.

The good thing for Canada is it will force us to diversify our trading partners as we should have a decade ago.

Our dependence on a US housing bubble is our own doing and we will suffer the consequences.

Multiple trade partners instead of one large elephant is highly desirable and yes some sectors will get hurt.

The US has gone from the worlds largest creditor nation to the worlds larger debtor in 30 years.

Canada dodged the consequences of fiscal imbalance in the 90s thos we still have fallout ( downloading etc )

The US in in for way more problems. Grim reading this. Not like the Economist hasn't been predicting it for a few years now. :rolleyes:

Plummeting Dollar, Credit Crunch... By Mike Whitney
 
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