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Winnipeg Free Press - PRINT EDITION

Strong loonie good for shoppers, bad for industry

Dollar nears parity, goes farther in U.S.

By: David Friend

Posted: 03/13/2010 1:00 AM | Comments: 0 (including replies)

TORONTO -- The Canadian dollar is racing towards parity faster than even the most daring economists predicted, but the surge could have longer-term effects as more manufacturers weigh whether they can afford a higher loonie and vacationers look to sunny U.S. destinations for deals.

The loonie touched a 20-month high against the U.S. greenback on Friday, briefly tapping 98.47 cents, its highest level since July 2008, on the back of an optimistic labour market report.

The currency later closed at 98.20 cents U.S., up 0.57 of a cent.

Canada's dollar has been on a steady climb for the past year, but has really picked up the pace since mid-February, rising more than three cents on stronger optimism about the economy and the prospect of higher interest rates in Canada.

For many Canadians, the rise offers plenty of new opportunities for cross-border shopping bargains and major savings on vacations, but there's also a downside.

It also makes the cost of Canadian lumber, pulp, chemicals and auto parts more expensive in the United States and hurts the prospects of Canadian exporters in their largest market.

The sudden increase in the loonie could force some companies to head back to the drawing board and Canadians to draft new vacation plans.

Travel agent Flight Centre knows vacationers habits, and a spokeswoman for the company says that when the loonie climbs, so do the company's bookings.

"You're suddenly going to see a lot of people inquiring about Las Vegas, Disneyland and Florida," said spokeswoman Allison Wallace.

For those who didn't secure a flight to a sunny destination in the United States there's always cross-border shopping, where Canadians can sometimes dig up major deals on typical household items, when compared to the price in Canada.

"You look at the back of the book for the Canadian price, and it's a joke when the dollar is almost at par," said Jennifer Cherneski, a rabid cross-border shopper.

-- The Canadian Press

Republished from the Winnipeg Free Press print edition March 13, 2010 B5

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