The Canadian Dollar and the US Dollar are at par, once again! The last time this happened was back in September 2007, and the time before that was in November 1976.
Great… I’m Canadian! So now what can I do?
Well, if you don’t live far from the U.S. border, now might be a good time to take a short vacation and stock up on cheaper goods while you are there. Sometimes there can be a significant difference in price. For example, junk food at Walmart is much cheaper in the U.S., although I don’t recommend you go there just for that.
Vehicles can be much cheaper. For example, a Kawasaki Ninja 650R lists for $8 699 CDN$ MSRP, but the same motorcycle lists for only $7 099 USD$. For another example, a Lexus LX 570 starts at $89 750 CDN$, but only $76 905 USD$. There may be additional taxes to pay when crossing the border, so you still need to check if it’s worth it, but the savings can often be quite significant.
Another way to save money is to book flights out of a US airport. This doesn’t always save money, but for some flights, it can be cheaper to park at the US airport and fly out of there than flying out of your local Canadian airport!
There are many other ways to take advantage of the high Canadian dollar, such as taking vacations down south or buying stuff online. I recommend to look for the opportunities out there and to take advantage of them.
Wait a second… I’m American! How does this benefit me?
Sorry, it doesn’t really benefit you as a consumer, since if you come up north, everything will be more expensive for you. Our exports will also be more expensive for you to buy. However, a stronger Canadian dollar still benefits the U.S.
The U.S. is currently a nation of consumers and not of producers. You guys consume far too much and don’t produce enough. The U.S. was once a mighty industrial nation, and has the potential to be one once again. If the U.S. dollar falls relative to other nations, then that means foreign goods will be more expensive relative to U.S. produced goods, encouraging both Americans and foreigners to purchase U.S. goods. U.S. production will rise, creating jobs and reducing the trade deficit.
If a lower dollar helps to create jobs, then why not just drive the value through the floor?
That seems to be what both the Canadian and American governments like doing. Whenever the Canadian dollar becomes strong, the manufacturers cry that it kills their competitiveness, because it costs more for consumers in foreign countries to purchase their goods. Although this could potentially set off a “race to the bottom” in order to prop up manufacturing sectors, the fact that Canada’s economy is propped up by natural resources lessens the pressure to do so here.
Another reason is that nothing comes for free. If the value is driven to the floor, that means that it will be difficult for consumers to purchase goods overseas. Cheap goods from China might have driven American jobs overseas, but they only did so because the cost of doing business in the U.S. is much higher, and with government growing larger the costs have nowhere to go but up. If U.S. purchasing power collapses, this will necessitate a drop in living standards as Americans struggle to be competitive once again.
So, how do you feel about the rising Canadian dollar? Do you see it as desirable? How long do you think it will last?