Canadian dollar hits parity, the ‘new reality’ – The Globe and Mail

Canadian dollar hits parity, the ‘new reality’

Loonie and U.S. dollar

Loonie and U.S. dollar Adrian Wyld/CP

Loonie matches U.S. counterpart for first time since July, 2008, then slips back

Started by: Claire Neary
3 replies
Last post by canoe lake comments
4/6/2010 9:38:21 AM

“Parity is the new reality,” Scotiabank’s currency strategist Camilla Sutton said.

That reality has a number of consequences. In the near term, it will almost certainly increase pressure on Canadian retailers to cut their prices to match U.S. levels. Clothing retailer Brooks Brothers, said yesterday it is trimming prices to make them more in line with its U.S. outlets.

It’s welcome news for travellers headed to the United States, who will find travel much more affordable. Those headed to Europe this summer will also feel the effects of the strong currency, with the loonie appreciating against the euro and British pound as well.

It now costs Canadian sports teams less to hire U.S. players and pay them in the U.S. currency.

And importers of goods will see prices ease.

The ascent will weigh on exporters and companies without hedging strategies, though, which will see margins squeezed and their goods less competitive when sold abroad. That, in turn, could eventually dent Canada’s gross domestic product just as the economy emerges from recession.

Canada is widely seen as the strongest-performer among G7 nations this year. The G7 is made up of Canada, the United States, France, Germany, Italy, Japan and the United Kingdom.

With files from Michael Babad

Posted via web from Toronto Real Estate News | Blog

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