How Low Can It Go? The “Loonie” That Is.

If Fidelity Investments’ portfolio manager David Wolf is right, pretty low. “The currency is likely to get weaker and it needs to – to rebalance the economy,” said Wolf in a recent interview with Bloomberg. Wolf is predicting the Canadian dollar could drop to $0.62 “amid a slowing [Canadian] economy.”

For comparison, the long forecast published by The Economy Forecast Agency has the Canadian dollar valued at $0.76 to the US dollar though 2019. For 2020, their expectation isn’t too much different with an average value expected to be approximately $0.75.

Regardless, the overall trend seems to remain; the Canadian dollar will be weaker than its U.S. counterpart over the remainder of 2019 into 2020. This is good news for Canadian exporters doing business in the U.S.A.

Since when is it good to have a low “Loonie”?

Typically Canadians consider the poor exchange rate between the Canadian Dollar (CAD) – USA Dollar (USD) as a hindrance because they are often considering it from a consumer perspective. However, with a slight mental shift away from consumer to business owner/entrepreneur, savvy Canadian companies realize US sales present them with many lucrative opportunities – particularly during a national economic downturn.

Assuming all the proverbial ducks are in a row, ‘I’s dotted and ‘T’s crossed, Canadian business owners and entrepreneur stand to earn at least 30% more on their U.S. sales in part due to the favorable exchange rate.

“Here are the simple facts,” says UCanTrade, Inc. president and dual citizen, Jim Pettinger:

“(1) most U.S. land border crossings have been upgraded and are fully open for Canadian goods and people,
(2) each sale you make for US$100 nets you C$130 or more,
(3) your business presence in the U.S. can lead to a green card and dual-citizen status if you wish, and
(4) American buyers (a) love Canadian goods, (b) have double the available money of their Canadian counterparts and (c) make their buying decisions at least three times as fast.”

With careful planning, the initial cost can be minimal, but the payoff could be enormous.

TradeTips blog is published by UCanTrade, Inc., your cross-border experts since 1984.

Subscribe to our TradeTips Newsletter for the latest import/export events and trade news, and/or call us at (360) 380-6900.

Phone: 360-380-6900
Twitter: @UCanTrade

UCanTrade Staff