Lowly loonie means winners and losers in B.C.

Canadian dollar to dive through 70 cents before bottoming at 67, predicts Business Council of British Columbia

The loonie's recent tumble is the steepest three-year slide against the U.S. dollar in history.

The loonie's recent tumble is the steepest three-year slide against the U.S. dollar in history.

The dramatic dive in the loonie that has put the brakes on cross-border shopping and driven up the cost of U.S. imports is far from over, according to the Business Council of B.C.

The council predicts the Canadian dollar will continue its slide down through the 70-cent threshold before bottoming out at around 67 cents U.S.

“All the pressure on the dollar is down and I think it’s got further to fall,” said BCBC executive vice-president Jock Finlayson, who expects the loonie to languish between 67 and 75 cents for the rest of this decade, barring a major rebound in energy prices.

“I think we’re in a world where the Canadian dollar is going to stay quite low for as far as the eye can see.”

The impacts of the spectacular currency swing will be felt much more strongly in 2016, he said.

The loonie’s descent from the heights of three years ago – when it was above par – to below 72 cents today already translates into savage math for anyone buying U.S.-priced goods: it costs Canadians roughly 40 cents more to convert each U.S. dollar than it did in late 2012.

The loonie’s “stunning” drop is the steepest decline of any three-year period.

“It’s an enormous shift in buying power,” Finlayson said. “We’re significantly poorer in a global sense.”

Border crossings plummet

Nowhere has the swoon been more apparent than at the border, where long lines of B.C. shoppers once headed south for U.S. bargains.

In November, fewer than 600,000 Canadians entered Washington State at the five Lower Mainland border crossings, according to Canada Border Services Agency data. That’s a 34 per cent drop from more than 900,000 in the same month of 2013, and Canadian trips were down 50 per cent at the Aldergrove crossing.

It’s good news for many retailers as B.C. shoppers increasingly spend money at home – retail sales are up nearly six per cent.

“It depends on what you’re selling and where you’re located,” Finlayson said. “South of the Fraser and the Fraser Valley was the epicentre of where retail dollars were leaking across the border.”

Meanwhile, the number of U.S. visitors heading north is up 16 per cent year-over-year at the Peace Arch border crossing, as Americans discover how much further their greenback goes here.

Finlayson said 2015 was already a strong year for tourism and that’s likely to get even better next year with the low dollar, cheaper gas and a recovering U.S. economy.

“We’re benefitting in two ways,” he said. “We’re getting more Americans coming into the market here and spending, and we’re seeing fewer Canadian dollars leak out.”

Border xings Nov YOYCreate line charts

Winners and losers

The ‘we’ Finalyson refers to is the B.C. economy – which is expected to gain overall from the low dollar – but he is quick to point out there will be winners and losers.

The main losers are B.C. consumers.

Even if you never jet off to a U.S. vacation you can expect to pay more for anything that comes from the States.

“It’s everything from fruits and vegetables through to pharmaceuticals, consumer electronics and vehicles.”

Importers of U.S. goods could suffer, and businesses that need to buy imported machinery and technology from the U.S. may struggle to invest at the same pace.

On the other hand, B.C. exporters who sell many products or services in U.S. dollars should gain from the low currency.

They include many Lower Mainland manufacturers and labour-intensive tech sector industries like game designers whose wage costs for B.C. workers suddenly make up a smaller slice of their revenues.

B.C. bargain priced

Foreigners from students to investors will find Canada a bargain.

Finlayson notes a Chinese student deciding which North American university to attend will now find a Canadian one costs them about 30 per cent less after the currency conversion than when the dollar was above par.

The same applies for real estate buyers from the U.S. or China with their sights set on B.C. property.

The currency drop more than wipes out the 19-per-cent price climb over three years of a typical Metro Vancouver condo. A foreign buyer will therefore be out of pocket less today than if they’d bought that condo in 2012.  (Detached houses are up 33 per cent over three years, so the currency very nearly erases that gain as well.)

“Canada is on sale, big time,” Finlayson said. “We are certainly seeing foreign money flowing into the real estate market, not just on the residential side but it’s also happening with commercial.”

The film industry is “absolutely booming” from the exchange rate swing and poised to set new production records in B.C.

Finlayson noted the provincial government boosted film tax incentives to help preserve the industry when the dollar was high and he suggested Hollywood North may no longer need life support given the “huge competitive benefit” of a lower dollar.

“The province is spending hundreds of millions of dollars every year to pick up a fairly hefty chunk of the labour costs of the film industry.”

The loonie has dropped from above par to less than 72 cents over the past three years. Yahoo Finance

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Chilliwack Law Courts. (Black Press file)
Man sentenced to 20 months for sexual interference in Mission

Will Laws Clark was 22 and victim was 13 at time offences began

A worker is seen throwing a chicken in an undercover video in 2017 filmed by California-based animal rights activists Mercy For Animals.
Fraser Valley chicken abuse trial delayed until February

Originally scheduled for a jury trial, Sofina and Chilliwack company now face judge alone

Sheriff Avory Chapman was last seen Jan. 20 on Wellington Avenue in Chilliwack. (RCMP)
RCMP look for missing man last seen in downtown Chilliwack

21-year-old Sheriff Avory Chapman has been missing since Jan. 20

Menno Place. (Google Street View image.)
COVID-19 outbreak declared over at Menno Home in Abbotsford

Long-term care home had 67 cases and 13 deaths since mid-November

Crews with Discovery Channel film as an Aggressive Towing driver moves a Grumman S2F Tracker aircraft around a 90-degree turn from its compound and onto the road on Saturday, Jan. 23, 2021. It was the “most difficult” part of the move for the airplane, one organizer said. (Jenna Hauck/ Chilliwack Progress)
VIDEO: Vintage military plane towed across Chilliwack over weekend

Grumman CP-121 Tracker’s eventual home the British Columbia Aviation Museum on Vancouver Island

Rose Sawka, 91, waves to her son through the window of a care home in Prince Rupert in October. Residents of the care home received their first vaccine dose Jan. 20. (K-J Millar/The Northern View)
B.C. care home visitor access to expand by March, Dix says

Staff, residents, essential visitors top priorities for vaccine

The Independent Investigations Office of BC (IIO) is looking into the death of man discovered Jan. 11 in east Maple Ridge. (Black Press files)
B.C.’s police watchdog investigating man’s death in Maple Ridge

Man was found dead Jan. 11 after recent contact with police

Rolling seven-day average of cases by B.C. health authority to Jan. 21. Fraser Health in purple, Vancouver Coastal red, Interior Health orange, Northern Health green and Vancouver Island blue. (B.C. Centre for Disease Control)
2nd COVID vaccine doses on hold as B.C. delivery delayed again

New COVID-19 cases slowing in Fraser Health region

Provincial health officer Dr. Bonnie Henry talk about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. Two more cases of the COVID-19 strain first identified in South Africa have been diagnosed in British Columbia, bringing the total to three as of Jan. 16.THE CANADIAN PRESS/Chad Hipolito
B.C. now has three cases of South African COVID-19 variant, six of U.K. strain

Both variants are thought to spread faster than earlier strains

Rodney and Ekaterina Baker in an undated photo from social media. The couple has been ticketed and charged under the Yukon’s <em>Civil Emergency Measures Act</em> for breaking isolation requirements in order to sneak into a vaccine clinic and receive Moderna vaccine doses in Beaver Creek. (Facebook/Submitted)
Great Canadian Gaming CEO resigns after being accused of sneaking into Yukon for vaccine

Rod Baker and Ekaterina Baker were charged with two CEMA violations each

Police discovered a makeshift nightclub in a Vancouver apartment on Jan. 23, 2021, and say it wasn’t the first time this month officers have been called to the unit over social gathering concerns. (Phil McLachlan - Capital News)
Doorman of makeshift ‘booze-can’ in Vancouver apartment fined; police look to court order

This marks the fourth complaint about social gatherings inside the apartment in January

A Kelowna couple welcomed their Nooner baby in December. (Flytographer)
Kelowna couple welcomes baby girl from Hotel Zed Nooner campaign

Nicole and Alex will now have 18 years of free stays at the hotel

Kyrell Sopotyk was drafted by the Kamloops Blazers in 2016 and played two seasons with the Western Hockey League club. (Photograph By ALLEN DOUGLAS/KTW)
Kamloops Blazer paralyzed in snowboarding accident sparks fundraiser for family

As of Jan. 24, more than $68,000 had been raised to help Kamloops Blazers’ forward Kyrell Sopotyk

Most Read