(New York Times – Ian Austen)
For Canadians looking to escape winter’s premature arrival in many parts of the country by visiting the United States, the equally unexpected movement of the Canadian dollar toward parity with its American counterpart is welcome news. For corporate Canada, however, the development is less inspiring.
At Cascades, a producer of cardboard used to make boxes and tissue paper, every cent the Canadian dollar gains shaves 4 million Canadian dollars from its operating earnings.
With 40% of the Canadian economy dependent on trade, mostly with the United States, the prospect of the two currencies being at par for the second time since 2007 probably creates more anxiety than joy in Canada. And while currencies around the world have been rising against the United States dollar, many are laggards compared with Canada’s. Since mid-March the Canadian dollar has risen 27%, closing on Wednesday at 97.30 cents, up from 76.53 cents.
“The Canadian dollar is a strong threat to the economy,” said David Watt, a vice president and senior currency strategist at the Royal Bank of Canada. “Once the Canadian dollar starts getting to levels like parity, the recovery scenario goes from assured to dicey.” Read more here.
