The Canadian dollar reached a 30-year high this week versus the U.S. dollar, up past 94 cents. Implications? From Bloomberg:
Harper said he wouldn’t try to press the Bank of Canada to interfere in the currency market although he has “sympathy” for Canadian manufacturing workers losing their jobs due to the strength of the currency. The higher dollar makes Canadian factory goods more expensive to foreign customers.
Manufacturers have fired 89,400 workers in the 12 months ended in April. Unions protested in Ottawa May 31, seeking to encourage government action to curb the dollar’s rise.
Here in North Dakota, the rising Canadian dollar is a page one story and much appreciated, at least for retailers and the tourism industry. Once again, Canadian shoppers are flocking south to malls in Grand Forks and Minot.
“National information expecting the Canadian dollar to be strong reinforces our (marketing) efforts to Canada,” [N.D. Tourism Director Sara] Otte-Coleman said. “Golf courses and other attractions are seeing Canadians already with school not even being out for them – it’s already a good thing.”
According to Chuck Massey, general manager for Dakota Square Mall, rates have been favorable for over a year for Canadians, and the mall will continue to see an influx of Canadian visitors.
Massey said Canadian media outlets also contact the mall periodically to give their audiences updates on the mall happenings.
But back to manufacturing. Grant Thornton in Canada issued a cautionary report recently to Canadian manufacturers, suggesting they had become too dependent on undervalued currency.
According to Grant Thornton, during the late 90’s and into the 2000’s Canadian manufacturers and distributors were lulled into a false sense of security fostered by an undervalued currency and robust demand from the U.S. marketplace. This has underpinned consistently high levels of confidence, while emerging markets with low costs and growing industrial capacity have been largely ignored. If profitability and success are to be sustained there is an urgent need for action. A new industrial age has arrived and it is characterized by change, rapid response times, and the need to incorporate a broader global perspective across entire operations.
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