The latest plunge in the loonie is making cross-border shopping and travel to the U.S. even more expensive.
The Canadian dollar dove from more than 83 cents U.S. to a low of 80.7 in trading Wednesday after a surprise decision by the Bank of Canada to cut interest rates by 0.25 per cent in a bid to bolster the economy against the effects of falling oil prices.
“It’s going to kill a lot of cross-border shopping, which is exactly what Canadian retailers want,” said SFU business professor Lindsay Meredith, noting the loonie is down nearly 20 per cent from close to par two years ago.
“That’s going to be deadly for Whatcom County because they depend so much on B.C. shoppers.”
He denounced the interest rate move as an attempt by the Harper government to artificially deflate the loonie to prop up Ontario and Quebec manufacturers and “bail out” oil producers, who gain because they sell oil in U.S. dollars but pay most costs in Canadian.
“This is about votes and the next election,” Meredith said.
But he predicted B.C. will also gain because it will help the forest industry sell more lumber to the U.S.
“The losers are Canadian consumers. To the extent we buy imported products we get hammered more.”
Fruit and vegetables from California will go up in price due to the currency wing, he predicted, despite lower transportation costs.
Anyone planning a winter getaway to Hawaii or another warm U.S. destination is likely getting anxious about the exchange rate they’ll pay on the money they spend there.
Meredith said some snowbirds may look to other Latin American destinations instead.
Meanwhile, B.C. tourism businesses could blossom if it can tap Americans whose greenback now goes further north of the border.
“It’s wonderful for tourism,” Meredith said. “Whistler Blackcomb shares ought to be skyrocketing.”
VIDEO: Excerpt of Bank of Canada governor’s news conference – via BC Daily Buzz (Jan. 21, 2015)