Canada's loonie lunacy

Low oil prices and a surging US economy mean Canadians are facing a diminished bang for their buck south of the border.

    The Canadian dollar has plummeted against the US greenback in recent years [Ryan Remiorz/Canadian Press]
    The Canadian dollar has plummeted against the US greenback in recent years [Ryan Remiorz/Canadian Press]

    This week, Canada's dollar sunk below 70 US cents, its lowest level against the greenback since 2003.

    And my country's currency - affectionately known as the "loonie" - looks set to continue sagging against the US dollar. One well-regarded financial expert predicted that I'd be getting less than 60 cents per loonie by the end of his year, were I foolish enough to spend any in the United States.

    Just three-and-a-half years ago, our currencies were at par and Canadians revelled in cross-border shopping frenzies, Las Vegas and Florida vacations, and binge buying from The wealthier among us picked up pied-a-terres in Manhattan and our property companies and banks invested heartily in a US economy still recovering from the banking crisis of 2008.

    We were flying high and loving it.

    Not any more. 

    For a variety of reasons - low prices for oil exports, a surging US economy, and interest rates heading in opposite directions either side of the border - we're facing a sustained period of low bang for our buck when we head south. Not that we have to travel to feel the pain.

    For most of the year, a lot of our fresh produce comes from the United States. Many of our non-US imports are priced in greenbacks. The cost of living is going up in the supermarket and beyond.

    About the only thing that's getting cheaper is oil.  But lower driving and home heating costs are more than offset by everything else gobbling up our diminishing dollars.

    Our professional sports teams already had trouble attracting top talent with media markets and product endorsement opportunities substantially less than their leading US counterparts. Add to their woes a currency that's sinking fast and a lot of players expecting their salaries in US dollars.

    There are upsides. Our exports are cheaper, especially high-end manufactured goods.    Our universities will attract more foreign students who pay higher tuition fees than locals.

    Our already-thriving film industry hosting Hollywood shoots will blossom anew as the cost of producing a blockbuster in Toronto or Vancouver sinks.

    And of course, that cross-border flow of tourists is reversing, with plenty of Americans taking relatively cheap (for them) holidays among our mountains, lakes, and cities. Not to mention the dozens of casinos we've set up to fund our health and recreation budgets. Expect them to bulge with foreign gamblers losing greenbacks. 

    Canadian travel experts are compiling places where our dollars still compare favourably. It's not a long list but there are some rather nice destinations where local currencies are even worse off than ours: South Africa, Brazil and Iceland, for example. 

    And of course, we will stay home and spend our dollars on vacations in Canada.

    In the end, we've been here before. Currencies fluctuate and ours has swung wildly several times in the past two decades. It's not economists who find this perplexing or worrisome as much as we ordinary Canadians. We see it as a matter of national pride, and it's not.  It's normal financial life.

    I have a proposal that could ease the fluctuating emotions, if not the macroeconomics. We need to stop referring to that currency of ours as a "dollar". That all but guarantees the constant comparisons with the US greenback; the elation when it's up and its counterpart - angst - as it sinks.

    And we already have a name that's in constant use, every day in this country - loonie.

    On the back of our $1 coin is an image of the North American loon, an iconic water bird that punctuates our summers with eerie night-time trills. It defines the coin - so why not the currency, too?

    We're already bound to the United States more closely than any other major economy. Let's delink from the dollar. In our minds. Think about it.  A loonie for your thoughts.

     Canada's salt lakes help reduce carbon emissions


    SOURCE: Al Jazeera



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