And It Keeps on Rising, and Rising, and Rising, and....
Wilhelm Gunter
The upward trend of the eCanadian Dollar is mirroring it's RL counterpart, and it's just as worrying for us eCanadians.
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About three weeks ago, the eCAD was trading at about .029 gold/CAD (1 Gold = 34.82 CAD). As I write this article, you will be hard pressed to find an offer that will give you .033 gold/CAD... the majority of offers are now at .034 gold/CAD (1 Gold = 29.41 CAD). That's 5 basis points in 3 weeks!!
What does this mean?
1. For the eCanadian who generally deals in CAD, that means your Loonie will now purchase you more goods.... in FOREIGN MARKETS.
2. If you generally do your buying in GOLD, it means that products here in eCanada are MORE EXPENSIVE.
3. If you own a business here in Canada, it means you probably will have fewer customers come through your doors, because they have likely added "cross-border shopping in the US" to their to-do lists. In addition, because the CAD now buys more in foreign markets, it makes it more attractive for FOREIGN companies to set up shop here in eCanada and take our eLoonie home with them, where a CAD can buy more than their own local currency can!
I am a staunch supporter of a weaker eCanadian dollar, somewhere between .025 and .030 Gold/CAD. If you've read my Re-election Platform, you'll know that I am a strong supporter of supporting the eCanadian economy. Thus, with no weakening of the dollar in sight, it would be unwise of me to keep all my funds in Gold, and have invested all my money in CAD. Heck, I might even make a little money by doing so!
So if you find this trend as worrisome as I do, I encourage you to make your views known. Our Parliament seems to be dithering over this issue, listening to contradictory opinions on what to do! You know where I stand.
You can find out who your member of Parliament is for your region by clicking here. Do not keep your voice to yourself. Make it known!
Comments
gold is shiny
High Dollar in this game is pretty bad ... not to mention Canada is an exporting country, with high dollars its hard to export while making a profit.
I am for a stable CAD. Its been a 13.3% rise in less then a week. If i could pick a rate it would be .03, but stability is more important.
I am having a difficult time reconciling your claim that eCanadian products are growing more expensive with the fact that we have been experiencing a deflationary period for the past few weeks. Our current expression of inflation is -2.59 %. Admittedly I am not that savvy from an economics perspective. Please help me understand.
Quinn: Your confusion is understandable. Keep in mind there are better economic gurus out there than I am.
However, you perspective of things - with the negative inflation in mind, is taking place in a 'bubble' so to speak.
Let me demonstrate with this example: Three weeks ago, let's assume a Q1 weapon cost $4.00 CAD. The exchange rate at the time was .029 Gold = 1 CAD. Than means this Q1 weapon, three weeks ago, cost .116 Gold. Let's assume today the Q1 weapon costs 3.80 CAD (5% decrease in price). Today, with the exchange rate at .034 Gold = 1 CAD, the price of that weapon actually costs .1292 Gold.
It's this "hidden" price of items, that one needs to look at. As a Canadian, I can now take my Gold to the US (the cross border shopping that I mentioned above) and get 40 US dollars for it today! Remember, today 1 Gold will only get me 29.41 CAD. When it only costs me 3.72 USD (best offer at the moment) to buy a Q1 weapon weapon, compared to 3.61 CAD here at home, guess where I'd rather be buying weapons? Especially if I'm buying in bulk, that makes a HUGE difference.
Of course, I will always insist on buying here in Canada, from Canadian companies. But it's far from the cheapest way to do it.
Hope that helps.
Agreed. Congress has tried to move in this direction, but unfortunately the current executive branch does not agree.
Citizen B
I cannot agree enough! I like Wilhelm have held a "Buy Canadian" approach, but this continues to get harder and harder to do as I study foreign markets and see just how much I could be saving by buying overseas, is some cases I'm paying 50% more when buying Canadian when you take into account the high canadian dollar vs. the rest of the world (minus Spain).
It is so very tempting to invest in foreign markets instead of here at home.
One thing I would ask congress to keep in mind is that if the dollar does get lowered, they should announce this a few days before, and give those eCanadians with a surplus of CAD to purchase Gold so that they aren't just losing that value of the CAD in hand...or at least have that choice.
Voted!
@Andrew: Unfortunately, we in government can no better predict that you, how a currency will react. I can only suggest is you pay attention to how often and how much CAD the government prints. This is probably the best way to guess how the CAD will rise or fall.