The Canadian dollar has been sinking deeper in the last couple of days and this makes me really wonder. I thought the big recession is in the United States? Then why is it our Loonie the one affected by this financial trouble? Isn’t it Canada the country that has the biggest oil reserve in North America? Isn’t it Canada’s banks which were given the highest praises just a week ago for being the most stable in the world?
(image from X-rates.com)
Why then is our loonie losing its luster? I cannot really explain or understand why, but to be honest there are the good and bad side to what’s happening to our dollar.
First the disadvantage. When you send money to the Philippines or to anywhere in the world, you practically have to add a little over 20% than what you originally send before this exchange rate anomaly. That’s at the present rate of exchange (Oct. 24, 2008).
If you’re oursourcing for articles like me, then that’s a real big disadvantage. If you are in other places in the world where the US dollar is the prime exchange note like in Hong Kong, our beloved Canadian dollar suddenly is not lovely anymore!
Just to think that only a few weeks ago, the Canadian and American money is almost at parity. Dang!
The only advantage now is that, Americans can now visit Canada and spend their money here and have 20% more spending power! Or suddenly, our exports to the United States is again competitive against other countries because of the continous fall in Canada’s loonie.
But that is if the U.S. and the American travelers are in the mood for spending whatever leftover resources or money they have with them. The way I look at it, most Americans would think twice or even thrice before spending any money they have with them, rich or poor. So, the end all is that – it’s still a disadvantage to Canada.
So, what now loonie? I guess we’ll just have to wait and see.