The Sky Is Falling and other Loonie Tunes!

Well well, the Canadian Loonie has fallen to $0.90 on the U.S. Dollar. this signals and end to Cross-Border Shopping and an immediate rebounding of the Canadian Retail landscape.

Raging Loonie

Raging Loonie

“Lower loonie will likely lead to less cross-border loot” News1130

“With sinking loonie, Canadian consumers expected to view cross-border shopping with caution in 2014” Watertown Daily Times

“The allure of cross-border shopping is dropping by the minute,” Doug Porter, chief economist at Bank of Montreal said.

“Even a one cent increase in the exchange rate causes a disproportionate number of Canadians to go cross-border shopping, according to a new study from a team of researchers including University of Toronto Scarborough and Rotman School of Management professor Ambarish Chandra”.

Does all this mean that a sinking loonie will result in the early return of Snowbirds from Florida, Arizona and other “warm” places. Will it contribute to the ultimate bankruptcy of US border cities such as Plattsburg, Buffalo, Detroit (too late) Bellingham and countless others that depend on cross-border shoppers? Will Canada be able to close multiple “Welcome To Canada” lanes at the border and ultimately trim border staff to a bare minimum. Will my books become fireplace logs? Yeah Right! 

The Canadian dollar is currently trading at its lowest level since September of 2009. However Canadians took 4.7 million trips to the United States in November, relatively unchanged from the month before when the loonie was at 0.95 U.S. While U.S. residents made 1.7 million trips to Canada in November, down 2.5 per cent from October.

I see no better time to shop smarter in the U.S. Why you ask. First off savings of more than 30% can easily be realized cross-border with a $0.90 loonie. Remember the CBC Marketplace? Bayer Aspirin, $5.96 US vs $13.96 Cdn – So the loonie is only worth $0.90 US, that means I’ll still be saving $7.41 before tax! Boo Hoo! and I’ll only save 22% on tires, 79% on Ketchup, and 41% on Freezer bags and finally only 45% on my Halls (that are made in Canada).

Here is another fact – the U.S. Dollar is an International Trading Currency as is the Euro. Other than for a few boutique items that are made in canada most importers, wholesalers and large retailer transact in U.S. Dollars. What does this mean. Well remember how canadian retail prices DIDN’T go down as the loonie increased in value against the U.S. well I’m going to bet that the reverse wont happen either – if Canadian wholesale costs go up SO WILL CANADIAN RETAIL PRICES! Lindsay Meredith with SFU’s Beedie School of Business says it best “What it’s bad for, is those Canadian consumers out there, because all the American products that are shipped north, have now gone up by ten per cent. That hits Canadian consumers… hey, that’s called inflation.”

“Corporate Canada is beginning to feel the effects of a plunging Canadian dollar, with some businesses raising prices – or making plans to do so – to account for the higher cost of U.S. goods”. Globe and Mail Jan 23. they go on to say “The loonie’s weakness will generally help exporters, hurt importers, push up fuel prices and make Canadians wince at the cost of international travel.

Air Canada, bless their hearts didn’t waist any time – Air Canada Vacations will also apply a $35 surcharge on trips to the U.S., Mexico and Caribbean destinations for travel booked starting Jan. 27. Let me check to see if  flights out of Buffalo went up, Nope!

Now here’s a good one – Energy firms operating in Canada but selling their oil and gas in the U.S. – Canada’s largest export market – cheer the decline. It gives these operators the chance to pocket extra cash. While businesses that buy fuel and other products (probably Canadian to start with) priced in U.S. dollars are poised to shift those higher costs to customers. Mike Pyle, CEO of Exchange Income Corp., a Winnipeg-based company that owns several regional airlines and small manufacturing operations, said his company will likely soon have to take action because its fuel costs are going to rise.

Read the complete story at http://www.theglobeandmail.com/report-on-business/economy/the-ripple-effect-how-the-slumping-loonie-affects-businesses-across-canada/article16477693/

Last word goes to Lindsay Meredith, he says the Feds aren’t complaining. “Canadian government frankly, stickhandled the whole damn thing in the back room, they want to see the loonie drop. That’s gives us a trade advantage against the Americans and allows us to ship those raw resources south as well some Canadian finished products, like wood products, for example.”

About 2sidesof49

This Blog is for all Canadian Cross-Border Shoppers wanting to maximize their returns on their U.S. shopping trips. Visit 2sidesof49.com for tips and tricks and links to our partners websites, blogs and products. Also check out my book The Canadian Cross-Border Shopping Guide - guaranteed to save you money!
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1 Response to The Sky Is Falling and other Loonie Tunes!

  1. nancytex2013 says:

    Yet another reason why I need to start earning a US paycheque ASAP. We never see the benefits of a strong loonie, but we take the hit immediately for a weakened one.

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