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Canadian Dollar Reaches Parity with US$

Posted by kdawson on from the who's-loony-now-eh dept.

boxlight writes in to mark the occasion when the Canadian dollar hit parity with the US dollar for the first time in 31 years. The article notes that Canada has run a budget surplus in each of the last 10 years. "This is actually bad for the profits of Canadian corporations that sell their products to the US for US dollars (Canada sells far more to the US that the US sells to Canada); but it means us Canucks will get cheaper Macs as the Canadian prices get closer to US prices with every new release."

20 of 702 comments (clear)

  1. what to do with "Canadian dollar jokes"? by peter303 · · Score: 5, Funny

    Answer: Change them to "American dollar jokes"

  2. Screwed economy but cheaper Macs?! by MLopat · · Score: 5, Insightful

    "This is actually bad for the profits of Canadian corporations that sell their products to the US for US dollars (Canada sells far more to the US that the US sells to Canada); but it means us Canucks will get cheaper Macs as the Canadian prices get closer to US prices with every new release."

    Somehow that seems like little comfort for us Canadians that realize the impact this has overall on our economy. Anyone that isn't into business or economics up here gets excited about the CDN dollar being stronger because it translates into better cross border shopping for a very small minority, cheaper vacations, and some discounted consumer items like Macs. But take a look at how this impacts the country as a whole and we don't have much to celebrate as an exporting nation.
    1. Re:Screwed economy but cheaper Macs?! by pokerdad · · Score: 5, Insightful

      we don't have much to celebrate as an exporting nation.

      Our economy is stronger than it has been in my entire life. At .70 US, .80 US and .90 US there were people predicting the imminent collapse of the economy, but as a whole it has just gotten stronger.

      And while we may export resources, we largely import manufactured goods, so for some one looking to buy just about anything, this is good news.

      Its also worth noting that while the loonie has gotten a little stronger, this is largely a story of the US dollar weakening and the Canadian dollar not following (as it has often done in the past). This means that the price of Canadian goods have not increased globally, leaving plenty of opportunity to sell to other markets.

  3. Re:Article is useless without a graph! by BadAnalogyGuy · · Score: 5, Funny

    A lot of people don't have graphs and Iraq such as and.

  4. Benefits to a cheaper dollar by ArcherB · · Score: 5, Insightful

    People assume that the dollar falling in value in relation to foreign currency is a bad thing. This is not necessarily the case. Here are some benefits:
    * American products become cheaper to foreign markets. This helps with the trade imbalances we currently have.
    * Foreign products become more expensive to American consumers, also helping with trade deficits.
    * It discourages foreign workers from sneaking into the US. Getting $4.00 an hour is suddenly not so much compared to what they get paid in their home country.

    I could go on, but you get the idea.

    --
    There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
    1. Re:Benefits to a cheaper dollar by benzapp · · Score: 5, Interesting

      The problem is we have no native industry for the vast majority of things Americans desire. We also are a net importer of food and energy.

      Someday, countries like Canada with lots of wheat will want something besides debt instruments in exchange for their goods. So too will countries like Saudi Arabia want something of tangible value in exchange for their oil.

      Rapidly rising prices of foreign goods may someday bring back American industry, but that is a generation away. We have too few engineers and no manufacturing infrastructure. We will have to train a whole new class of workers and build many new factories. This doesn't happen overnight.

      --
      I don't read or respond to AC posts
  5. The glass is half full or half empty? by Dzimas · · Score: 5, Insightful

    Another way of looking at this is that the US dollar is in freefall against the Euro and other major currencies. The shift between the US and Canadian dollars reflects this new reality. That said, I suspect Forex traders are caught up in the euphoria of parity. The Canadian dollar might well dip significantly below $1 American again as the rush of breathless media attention dries up and currency traders take their profits and run. This certainly isn't good news for Canadian manufacturers - I run a little electronics company that sells 90% of our goods in the USA. We have raised some prices by as much as 30% over the past five years, just to maintain margins. However, our customers don't necessarily see it that way - they think we're getting greedy. To keep things from getting out of hand, we've moved some production to China and started to source North American components in the USA, rather than dealing with Canadian distributors. That's not good news for our economy.

  6. Re:Article is useless without a graph! by eln · · Score: 5, Funny

    Imagine a graph with two lines. Now imagine those two lines converging until they meet.

  7. Book Prices? by senor_burt · · Score: 5, Insightful

    Can the book publishers start to change their book prices, then? It made sense before when they priced them out relative to currency, but at this point, to spend $32 CDN versus $21 USD for the same book, well, as far as I'm concerned, Canadian book vendors are going to go out of business as I start to buy more from Amazon.com rather than Amazon.ca - and Amazon.com frequently offers free shipping.

  8. Re:Article is useless without a graph! by kebes · · Score: 5, Interesting
    Here's a graph.However it doesn't show parity because different markets trade at slightly different values, as explained in this news item:

    "Currency trading is an over-the-counter market," a Bank of Canada spokesperson told CBCNews.ca. "It's not like the TSX." So there can be small discrepancies depending on the trades the data source monitors.
    However that article mentions that "The loonie briefly reached $1.0003 US on foreign exchange markets shortly before 11 a.m. ET, the Bank of Canada said." and TFA says "The Canadian dollar reached $1.0002, before retreating to trade at 99.93 U.S. cents at 11:01 a.m. in New York." So that narrows down the approximate moment when parity was reached.

    At present it's just below parity (0.9986), but the expectation is for the Canadian dollar to exceed the US dollar in the near future.
  9. Re:Article is useless without a graph! by Em+Adespoton · · Score: 5, Insightful

    In order to see anything useful, you should also plot the Euro and the Yen. While the CAD has increased slightly in buying power in recent years, the bigger news is that the USD has plummeted, likely due to bad fiscal policy (war debt).

  10. Freefall.... by downix · · Score: 5, Informative

    I find it funny how it is always put "the Euro rsing against the dollar" or "the Canadian dollar rises against the US dollar" when the truth is the US dollar is in freefall, loosing value hand over fist. I wonder how long before the Peso overtakes us?

    --
    Karma Whoring for Fun and Profit.
  11. Re:Article is useless without a graph! by Anonymous Coward · · Score: 5, Informative

    This graph might be a little more useful, as it goes back 30+ years:

    http://www.cbc.ca/news/background/economy/loonie.html

  12. Re:Meanwhile by ArcherB · · Score: 5, Insightful

    Meanwhile, while I sit in Europe trying to irk my way through grad school living off of dollars I saved while I was in the army(and a part-time job doing IT stuff for a small business), I watch their value and my immediate standard of living drop.

    I'm sorry that has happened to you. Unfortunately, anytime the value of something changes, someone wins and someone loses. I know hindsight is 20/20, but how far did you expect to get living in Europe with US dollars in the bank? Why would you not change those over to Euros when you decided to live there?

    As for the idea that discouraging foreign workers is a good thing, might I ask in what universe you live in? Do you actually want to pay 25 bucks for a meal in a cheapish restaurant? That is what will happen if the immigrant labor leaves.

    I have no problem with immigrant labor. What I have a problem with is illegal immigrant labor. Sure, it helps me get a cheaper burger at Chili's, but when I have to pay $50 for an aspirin at a hospital, I figure I'm not saving all that much. Besides, slavery allowed for cheap food and clothing as well, but that doesn't make it right. When an illegal is working at a plantation.. I mean farm, they are more or less owned by that farm. Only instead of being shackled by chains, they are shackled with the thread of deportation or imprisonment. I expect foreign workers in the US to get a fair wage. When that worker is here illegally, enforcing minimum wage or any other labor laws is impossible.

    --
    There is no "I disagree" mod for a reason. Flamebait, Troll, and Overrated are not substitutes.
  13. CDN book prices are a rip-off by diodeus · · Score: 5, Informative

    I grilled my local independent bookseller on this. She blamed the publishers, which are all in the U.S.

    Complain about it here: http://www.competitionbureau.gc.ca/

  14. Whose deficit is it, anyway? by fm6 · · Score: 5, Interesting

    Anybody else think it's ironic that at a time when people are resisting government run health care because of the expense, the Canadians are running a budget surplus — despite have government run health care?

    1. Re:Whose deficit is it, anyway? by man_ls · · Score: 5, Insightful

      Their military budget is a joke when compared to ours. That's why they're able to run a surplus -- it's not being spent on defense.

      Whether that's a good thing or not is a matter of opinion, but their lack of a military being the reason they can be more socialized is a matter of fact.

  15. Wait until China unloads dollars! by nate+nice · · Score: 5, Insightful

    Our beloved, once great country (the USA) is in serious financial trouble. China has been acquiring dollars for awhile now with the trade surplus they've had with the USA for some time. Usually this isn't a problem as the trading country reinvests these dollars into the USA's markets and businesses. This is good for the USA as you can imagine. In theory it should also raise the value of the trading countries currency because their GNP should be higher. But imagine the trading country keeps its currency artificially low so it can export things cheaper and cheaper and acquire more money (dollars) faster to build more and more factories, etc. It does this by sending the dollars back to the USA in the form of treasury bonds.

    Now imagine the USA expected a surplus and made a huge tax cut because of it. And then the surplus never happened so a huge debt was created. Someone has to pay this debt off. Imagine if the people paying this debt off are the ones you are running a trade deficit with. Hence, our trading partner buys treasury bonds at an alarming rate.

    This works great for the USA short term because we get cheap goods from China (because their currency is still of low value because they invest their profits right away) and save a little bit on taxes. Well, a lot if you're rich.

    But as you're probably starting to realize, this can't go on forever. Eventually it's going to collapse. At some point the debts will have to be paid and this will be done by raising taxes and INTEREST RATES. So now not only is the dollar worth less because everyone has a ton of them around the world, but it costs a ton to borrow them so no one wants them.

    All of a sudden the value of your house is half of what it was, the value of your paycheck is half, etc. A domino effect is created because no one can afford to borrow money any longer. American business doesn't take risks, people can't take risks, and money is tight. We haven't experienced this in a long time. Money has been cheap. It's been the USA's biggest seller. The dollar was valuable and it was available. That's prosperity. Imagine the dollar being expensive and worthless. That's a depression.

    So expect the Canadian dollar to become more and more valuable against the USA dollar for awhile.

    --
    "If you are a dreamer, a wisher, a liar, A hope-er, a pray-er, a magic bean buyer ..."
  16. Re:American dollar still goes much futher by g8oz · · Score: 5, Insightful

    >>Socialism is great till you run out of other peoples money.

    So are budget deficits. Wait until the Chinese get sick of funding yours.

  17. Re:Article is useless without a graph! by trolltalk.com · · Score: 5, Insightful

    > Although like most US policy of the last 6 years, instead of fixing the issue they plan to take over others. Soon Canada, the U.S. and Mexico will share the "Amero" as currency within the North American Union."

    Dream on. Canada hasn't had a federal budget deficit in more than a decade, and social security is fully funded on an actuarial for the next 75 years (that's right - 75 years, its not a typo). Contrast that to the US deficit, and the unfunded mess that is known as social security, with off-the-book intra-government "lending" totalling 75 trillion.

    You can have our loonies when you pry them from our cold dead hands! Actually, not even then! There's more of a chance of switching to the Euro as the greenback slowly does its imitation of SCO stock.

    --
    Kevin Smith on Prince