By John Van Dusen
The Canadian dollar is riding a 30 year high, sitting at a rate it hasn’t seen since O.J. favoured touchdowns over prose.
However, the loonie’s recent surge may not be good news for everyone — in both the business and student worlds.
“Depending on whom you are and where you are, the appreciation of the Canadian dollar is either good news or a disaster,” said Halis Yildiz, an assistant professor of economics.
First-year nursing student Anita Kermally isn’t happy about the new rate. Kermally moved to Toronto from Houston, Texas, to study at Ryerson.
Now that the currencies are equal, she says there are growing concerns back in Texas, where family-owned businesses have to deal with a falling dollar.
“Now you have to pay more for what you want,” Kermally said. Explaining that when her family sends her money, she does not get as much as she once did because of the exchange rate.
Kermally, a dual-citizen, is one of 52 American students paying domestic tuition fees. There are also 50 Americans who pay international fees at Ryerson.
In terms of business, Yildiz explained that while the strength of the dollar may be good for consumers, it puts the country’s manufacturing sector in jeopardy. This sector has seen 30,000 job losses since June.
“What happens is that Canadian goods become more expensive to export,” Yildiz said.
Less than five years ago, the loonie was trading slightly above ¢60 U.S., while on Aug. 31 of this year it was at ¢94 U.S.
Another Ryerson economics professor said the surge is thanks mostly to a weak American economy.
“It has more to do with the weakness of the US economy than the strength of the Canadian dollar,” said Professor of Economics Debapriya Sen. The U.S. housing industry is clogged with unpaid mortgages, offered at a subprime rate, driving the country towards a recession.
But all these American woes have yet to translate to cheaper prices for the Canadian consumer.
A study released in June by BMO Nesbitt Burns reported products are priced 24 per cent higher in Canada compared with the U.S. Students trying to take advantage of cheap exchange rates may be inclined to head south to Buffalo for shopping trips or, if they don’t want to pay the toll, go digital.
Ricky Leung, a fourth-year engineering student, buys computer parts online from the States. Leung is also considering investments in America. “It’s a really good thing for us because there’s not really a big difference in the exchange anymore,” he said.
One way to invest is by starting up an American bank account in Canada, but before you run to a teller, consider interest and conversion rates.
When transferring Canadian dollars into American dollars, exchange and interest rates apply. It costs money to exchange currencies, so the interest you earn on your account will determine if you are really getting your money’s worth, Yildiz said. He added don’t expect cheaper Canadian goods in the coming months.
“Canadians may now be wealthier in global terms, but the even exchange rate with the United States dollar makes it immediately obvious that they pay more than Americans for many goods,” said Yildiz. And in the time it would take for the market to even out prices, the value of the dollar could fall.