Although it has dropped sharply from a three-year high a couple of weeks ago, the Canadian dollar is still going strong, hovering at or near par with the American dollar for almost all of 2011. But businesses in St. Albert say the ride hasn’t been too hard on them.
The loonie hit $1.0598 US on July 26, its highest mark against the American greenback since October 2007. Since then, it has decreased somewhat, finishing trading Monday around $1.02 US.
St. Albert Chamber of Commerce president and CEO Lynda Moffat said that many local businesses are simply taking the current dollar in stride.
“It’s just a normal part of their business, because it hasn’t gone crazy,” she said. “If it was at $1.20, then maybe it would have a big impact that would certainly draw comments. … Some businesses really had an advantage when it was at 80 cents, and there are some businesses that really have an advantage when its $1.10.”
That’s the same for Stephen Hennigan, owner of Expedia CruiseShipCentres in Village Landing. He said that, for his business, the high Canadian dollar hasn’t had much of an effect on what has already been a strong year for sales.
“Some of the suppliers we deal with primarily price in both currencies, so that gives the client whichever currency they feel they want to deal in,” he said. “It has created an advantage for people booking in U.S. currency because, of course, the Canadian dollar is higher. … We’ve been seeing a fairly big upswing in U.S. bookings.”
Hennigan added that many of those suppliers also have set exchange rates rather than floating rates.
“It gives the client quite an advantage in booking in U.S. [currency] right now. It could be up to 10 per cent,” he said.
Todd Hirsch, senior economist with ATB Financial, said the strength of the Canadian dollar since the start of 2011 can be chalked up to increases in commodity prices and to Canada’s position on the global scene.
“Canada is still very much a natural resource producer and exporter, and when you see resources — particularly oil, gold, base metals, agricultural commodities, all of these things Canada produces — all of these things have really gone up in price over the past couple of years,” he said.
“Canada is in much, much better shape than Washington, [D.C.],” he added. “We’ve managed our financial matters much more responsibly, and investors are saying, ‘Canada’s a good place to invest, because it’s less likely they’ll have to raise taxes or do anything like that.’”
However, the recent dip can be attributed to shakiness in both those areas.
“The global investment community, anytime they’re feeling nervous or antsy or anxious about something happens, even though the U.S. is the one in trouble here, they all run for cover in the U.S. dollar,” he said.
As for an ideal position for the loonie compared to its American cousin, Hennigan said he likes it pretty much where it is.
“I think an at-par dollar would be a pretty decent outcome,” Hennigan said. “I don’t like to see it get out of whack too much. A weak dollar isn’t good for the consumer.”
“Unless there’s a big swipe, we just don’t hear a lot of comments,” added Moffat. “If it dropped again to 80 cents or hit $1.20 or something like that, we’d probably hear a stronger reaction from the business community.”
Hirsch predicted, though, that the Canadian dollar still has “a year or two of strength” where it could hover in the $1.05 to $1.10 US range.
“Once this all settles down, I think the Canadian dollar will regain some strength over the next year or two,” he said. “Looking out beyond a year or two, it’s really hard to predict. It all depends on a lot of factors, what oil prices are going to do and different things. But in the short term, I still think there’s more strength for the Canadian dollar.”
