The Canadian Dollar

[FlamesAddiction]

Some questions for the economics savvy people here:

With Canadian dollar hitting a 30 year high this week (~0.91-0.92 USD), shouldn't we be seeing more buying power with our dollar, and as such; shouldn't prices be going down on goods manufactured in the US? I remember when the Canadian dollar was shrinking, magazines and books started having separate US and Canadian prices on the covers that more-or-less reflected the difference in currency value, but they have stayed the same now even with currency values that are relatively close.

As I understand, recently the Canadian dollar has made gains on other world currencies. Does anyone have any links to this?

And lastly, I know that a low Canadian dollar gives us a trade advantage with the US, but what are the benefits (if there are any)?

[Bertuzzied]

THank you George Bush!

I've been ebaying like mad for the past 3 weeks. If you are looking for a new car, now is the time to buy one from the states.

[Maritime Q-Scout]

Originally Posted by Kobatuzzied

THank you George Bush!

I've been ebaying like mad for the past 3 weeks. If you are looking for a new car, now is the time to buy one from the states.

I'm about to do the same . . . Go Go Gadget eBay!

[Devils'Advocate]

Well, I've been surprised to see the economy stagnate over this. Sure the automobile sector in Ontario isn't thriving. And the entertainment industry is finding more profitable areas to shoot in... But for the most part we're still cookin' and the dollar keeps rising.

Though I think you are right to blame Bush - we haven't gained a whole lot on the Australian dollar, the British pound or the Euro. So it would seem that this is a reflection on the US being unable to control their debt and their deficit spending more than our economy.

[FlamesAddiction]

Originally Posted by Kobatuzzied

THank you George Bush!

I've been ebaying like mad for the past 3 weeks. If you are looking for a new car, now is the time to buy one from the states.

Actually, the whole reason I started thinking about this is because I am looking for a car.

Someone is going to have set me straight, because clearly don't understand how any of this works, but I was under the impression that because of free trade, the market values for products produced in both the US and Canada should be fairly unversal. Of course, with our low dollar (and the subsequent lower buying power), prices in Canada were adjusted to account for that.

But with our dollar approaching par with the U.S., howcome prices for goods don't reflect this? Shouldn't they be changing?

[Bobblehead]

Originally Posted by FlamesAddiction

Actually, the whole reason I started thinking about this is because I am looking for a car.

Someone is going to have set me straight, because clearly don't understand how any of this works, but I was under the impression that because of free trade, the market values for products produced in both the US and Canada should be fairly unversal. Of course, with our low dollar (and the subsequent lower buying power), prices in Canada were adjusted to account for that.

But with our dollar approaching par with the U.S., howcome prices for goods don't reflect this? Shouldn't they be changing?

They will, but the effect of changing exchange rates on durable goods can be extremely slow to adjust. Perishables will react much quicker, but in textbooks I've read exchange rates can take years for economies to fully adjust to.

Manufacturers still have parts inventories, production inventories, contracts, and so on that need to cycle through before the full results are seen. Yeah, the current prices will immediately affect the bottom line, but there is only so much flexibilty built in.

[Flames in 07]

Originally Posted by FlamesAddiction

Actually, the whole reason I started thinking about this is because I am looking for a car.

Someone is going to have set me straight, because clearly don't understand how any of this works, but I was under the impression that because of free trade, the market values for products produced in both the US and Canada should be fairly unversal. Of course, with our low dollar (and the subsequent lower buying power), prices in Canada were adjusted to account for that.

But with our dollar approaching par with the U.S., howcome prices for goods don't reflect this? Shouldn't they be changing?

In the longer run yes, there is a bit of a lag though. Car manufacturers in particular will say that Canada had a free ride for years when the dollar was worth 65 cents US.

BTW many people buy cars in say Montana then bring them back, you just pay a admin fee and GST at the border.

[Vulcan]

One other aspect that business tells us, is that due to Canada's small size they can't buy in as large bulk as larger countries can, keeping our prices higher. What I notice is that getting retailers, when they don't have to, to drop prices is akin to pulling teeth.

[habernac]

this will make it even more attractive to look south of the border to buy a vehicle. Manufacturers like Lexus are still pricing them like the Canadian $ is worthless. Dad saved over $20,000 last year. I'll be mountain bike shopping down there for sure.

[Nuje]

As far as a car, if I were to pay what I did for my car (bought a month ago brand new) in the States, I'd have all I do, plus Sat-Nav, Digital climate control, leather, high intensity lights....pretty much everything offered that I decided to pass on.