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Hitting Par The Canadian Dollar vs The American Dollar
n over 30 years, since gain from 2006 with a low
November 1976, the US inflation rate, and a red hot oil
dollar and Canadian dollar industry.
have not been par until now. As
the Canadian economy has been This rapid progression of the
progressing over the years, the Canadian dollar against the US
US economy seems to have fallen comes as a shock to some
behind with all its turmoil. The Canadians, who measured the
war in Iraq has not helped the US Canadian dollar value at .62 USD
economic situation but rather only four years ago in 2002, and
offset the deficit, and in a move now hitting par seems too good to
to avoid the forecasted economic be true.
recession due to the credit
crunch, the feds cut interests As Jeff Rubin, chief economist
rates by 0.5 points to 4.75 and strategist at CIBC World
percent. Markets, stated, “the Canadian
economy that once used to be the
The move to cut interest rates to sleepy little resource backwater
ease the mortgage industry has of the North American economy is
weakened the US dollar against certainly turning the tables on
foreign currency including the its big brother in a hurry."
Euro, and giving the push for the
Canadian dollar to hit parity So what does all this have to do
with the US dollar. One US dollar with Canadian and American
now buys one Canadian dollar. But dealings with each other? Well,
the Canadian dollar’s gain isn’t for starts there will be an
only linked to the US federal increase in American exports as
interest rate cut, but can also buying from the American markets
be seen as the Canadian economy will become cheaper for
has been booming in an upward Canadians. Although, vice versa
Canadian exports to America will luxury sports cars, will save a
also decrease, as it will simply Canadian buyer almost $14,000 on
cost more for Americans to buy average.
Canadian manufactured goods.
But the high loony will put
The Canadian tourism industry pressure on Canadian companies
will also suffer, as more that are dependent on exporting
American visitors will decline as to the US, who is also Canada’s
the dollar parity discourages largest trading partner. Already,
Americans from shopping in in 2006 there were almost 100,000
Canada, since the one time job losses in southeastern
savings of up to 40%, due to the Ontario, due to the rising
dollar value, will no longer be Canadian dollar against the US
available to Americans. dollar.
Although, Canadians will suffer Even with such a massive job
in sales, they will gain in loss, the Canadian economy is
purchasing from American based still doing well, as the
businesses, and buying cars from manufacturing sector loss a total
the American side is becoming of 289, 000 jobs since 2002, the
more attractive to some Canadian economy has created over
Canadians. As car prices in one million jobs in resources,
Canada are much higher than in construction, services, health
America, a lot of Canadian care, education and financial
shoppers will find drastic industries, leaving the national
savings by traveling south of the jobless rate at 30-year low.
border to buy a car. The
difference in prices may not be In contrast the Canadian dollar
the greatest for all cars, but seems to be stronger over the
gaps in some categories such as American for the time being, but
only time will tell the future of
the American dollar vs. the google_color_border =
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there is always uncertainty, but
given factors such as future google_color_bg = "FFFFFF";
interest rate cuts by the
Americans, could possibly even google_color_link =
lower the US dollar compared to "0000FF";
the Canadian, and this could
become reality in the next 6-12 google_color_text =
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