Living with the Loonie
The Canadian dollar’s exchange rate against the U.S. dollar and many other world currencies stayed at historically high levels throughout 2011. A sustained period at parity with the U.S. greenback started in January of this year, but this time, there was a key difference: Canadian exporters were better prepared to operate with the one-to-one exchange rate than when the loonie hit parity in 2007.
Four years ago, two-thirds of Canadian exporters surveyed by EDC reported that the exchange rate was a “very important” factor in their ability to compete internationally. This year, that proportion fell to 55 per cent.
Still, this leaves more than one out of every second exporter really feeling the pinch when our loonie trades at high levels. Exporters doing business in non-resource sectors are particularly vulnerable to the dollar’s value. That’s because of the more stable nature of prices for non-resource goods and services compared to resource exports. After all, it is the jump in resource prices, such as in oil and gas, that often causes our currency to appreciate in the first place.