Weak Canadian dollar gives visitors a reason to cheer
Lower currency also a bonus for Canadians paid in U.S. funds
Visitors to Canada this summer are enjoying more than just the Pan Am Games in Toronto, other urban hotspots or the natural beauty of the country. Many are delighted with the new, lower value of the Canadian dollar.
The love for the low loonie extends well beyond the Pan Am host community — there's a similar scenario playing out in Montreal.
Tourism officials in that city say they're seeing more visitors in 2015 than they have in the past 80 years.
"I think I might be more likely to spend a little bit more knowing I am getting a bit more for the dollar," Melanie Plesce of Huntsville, Ala., said as she enjoyed a sunny day in Montreal.
The loonie lost close to a full cent on Wednesday afternoon, following the Bank of Canada's announcement that it would lower interest rates yet again in an attempt to boost the sagging economy. On Friday, it fell even more, passing below 77 cents US for the first time since March 2009.
The days of 2012 and 2013 when Canada's currency traded above par with the American greenback seem very long ago. And many believe the Canadian dollar has further to fall.
"For the most part we think the Canadian dollar is going to have a lot of trouble. It's going to be an ugly story by the end of the year," says currency expert Rahim Madhavji of Knightbridge Foreign Exchange.
"The U.S. economy is doing well and they're looking towards raising interest rates, whereas the Bank of Canada just cut rates. It's a perfect storm for the loonie."
One of his clients is Wayne Levy of Florida Home Finders of Canada, a broker who specializes in helping Canadians purchase real estate in the U.S.
"Up until this year I would say 99 per cent of the deals we did were cash deals," said Levy, noting that most of the homebuyers used their Canadian lines of credit to purchase American cash.
"Now we're advising clients to get a mortgage down there. Instead of paying 100 per cent, we recommend they put down 25 per cent and pay off the mortgage when the dollar gets higher."
A boon for some
The lower loonie is actually a big bonus for people who get paid in American dollars. Consultant Karim Kherani is in that position, after his employer transferred him recently from Toronto to Dubai.
"Now that I'm getting paid in U.S. dollars, I think I've earned a 10 per cent salary boost," he said.
"It's been great. I'd be very happy for the next long while if the Canadian dollar continues to depreciate. I just feel bad for my family and friends in Canada who are travelling to the U.S."
Bloomberg data says the loonie is currently the second-worst performer among 10 developed nation peers.
Canadians with trips planned elsewhere might consider buying their foreign currency sooner rather than later — although betting on currency is as much a gamble as betting on sport.