The Canadian dollar dropped to a four-year low this week, prompting concern from at least one Calgary business owner.
The Canadian dollar closed at 1.40 against the U.S. dollar on Thursday, or 71.25 U.S. cents, marking its fifth straight day of declines.
Ryan Schoel, owner of The Costume Shoppe on Blackfoot Trail, says it’s inevitable that Canadian consumers will see prices increase if the Canadian dollar stays low.
“The average Canadian doesn’t really notice (the low exchange rate) until they go to buy something and it cost more,” he said.
Schoel sells his product in Canadian dollars, but says he purchases it from both Canadian and American suppliers.
He says even his Canadian suppliers are most often buying their product from America.
“Everything we buy, it’s an illusion that we buy it in Canadian dollars, we buy it in American (dollars) first,” he said.
Schoel says he does what he can to mitigate the fluctuations, but there’s only so much you can do.
“It is what it is, I guess.”
Moshe Lander, an economics professor at Concordia University, says the impacts of a low Canadian dollar are more far reaching than some people may realize.
While on the positive side, some Canadian companies might see more sales to international markets while the dollar is low, that in turn can cause adverse effects.
“Even if you say. ‘I’m not planning on an U.S. getaway, what do I care (if the Canadian dollar is low)?’ what you care is that there’s an extra conga line of foreigners lining up to buy our stuff, and that could actually make Canadian prices higher too.”
Lander notes that one of the last time the Canadian dollar reached these depths was when Donald Trump was elected president the first time in 2016.
“You draw your own conclusions, but I think that the reason for the recent trend down has been the disconnect between the Bank of Canada and The Fed, and that probably explains a lot more of it than it does the U.S. election,” he said.
“Now, whatever comes next, with the new Trump administration, whether they target Canada, whether they impose tariffs, whether they disrupt the global supply chains, that, of course, can have an effect – but the recent trend is not really Trump-related.”
– With files from Reuters
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