The Canadian dollar is once again at 52-week highs and edging closer to parity every day. Since this happens once in a blue moon, it pays to be able to recognize it when it’s happening and be able to act on the opportunity.
I’ve written previously about how you can build up your reserve of US dollars when the loonie edges higher. But here I just want to remind you of why you might want to do so and what having a good deal on US dollars can do for you. Some of Canada’s best companies consider the next 6-12 months to be one of the best times for going into the U.S. market, so it might pay to consider how you, too, could benefit.
The Highest the Canadian Dollar Has Ever Been Against the USD
What To Do With Your Money When the US Dollar is Weak and The Canadian Dollar is Strong
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Travel to the U.S. Shopping, dining, visiting relatives and sightseeing all become more attractive in periods like these, as most Canadians know. You can try to plan your trips for periods when the loonie is high. But you should at least avoid going when the loonie is considerably low. Why voluntarily tack on an extra 20% price tag if you don’t have to?
Buy U.S. products. Shopping, as mentioned above – for all kinds of things. Cars, second homes — elective surgery even, if you don’t find a service you like in Canada for whatever reason.
Buy U.S. assets. Rather than consumer goods items per se, assets will be investment-oriented and ideally help you generate some income. This might include buying a business or franchise, or it could be as simple as buying a website or U.S. equities.
Pay off U.S. credit card debts. If you travel frequently or do business in the U.S., you likely have a USD-denominated credit card. Now is a good time to pay it all off, if you haven’t yet. You definitely don’t want to pay off US dollars when the loonie starts sinking lower than it was when you made the initial purchase in USD. That would be adding insult to injury threefold when you add in the interest costs as well.
What Makes the Loonie Rise and Fall Against the US Dollar?
What You Should Avoid Doing If the US Dollar is Weak and Canada’s Is Strong
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Bad time to sell U.S. investments. As should be obvious as a corollary to the point made above about it being a good time to buy U.S. investments.
Bad time to export to the U.S. If you own a business, plan ahead for this period in which U.S. sales could be weak because the Canadian dollar is making your products or services look more expensive.
If you earn U.S. income, don’t convert this back into Canadian yet. In other words, make sure you have some system for pooling your US dollars when they are weak and before you convert them to Canadian. This could include business or investment income. In order to do this you need to make sure that you will not need your U.S. income for essential or recurring expenses. If you do, consider having an emergency fund or other system so that you do not have to suffer the negative effects of a bad exchange rate (rare as it might be in this direction).
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{ 12 comments }
My good buddy must have read your post, got a call from him (he lives in B.C.) that he wants to come down and visit next weekend (Seattleish area). He and 3 of his friends wanted to do a little shopping. Who knows where the dollar might go,it’s been a wild ride.
Sounds nice! I like that area. I know some friends (Canadian) too, who are now making a trip to the U.S. east coast – they didn’t plan it with the dollar, though, they’re just lucky:) – who knows where it will go by the time you’re at the Olympics:)
I just started and finished all of my Christmas shopping online, last night. :D The US sales + online coupon codes + strong CAN dollar make it an awesome time to shop — if you have too. ;)
Wow, the more i browse through your blog, the information is so useful and really simple to understand. Not just for consumers but for businesses too.
In fact, I am planning to go to US next month for shopping too.
Are there any specific spots in USA you guys go for shopping? I am looking for clothing mostly, winter clothing.
@Squawkfox – that’s a great idea. I hadn’t thought of taking advantage of it through online shopping, but that makes it even more convenient. Nice job!
@Tomas – thanks! Well, for winter clothing, I’d imagine, stay in the northern states. And you’re in Ontario, correct? You could probably get everything you need in New York State – outlets specializing in skiing, etc. The North Face is a big name for outdoor gear in the U.S. (like Canada’s MEC).
@Tomas – REI is about the best place around for your more Technical gear, very similar to MEC, they carry North Face, Marmot, ArcTerryx, Mountain Hardware, pretty much any of the higher end stuff. Gore-Tex central really.
@MoneyEnergy I know still hoping for a little drop in the Loonie in time for the Olympics. That same buddy who’s coming down is the one we’re staying with for the Olympics, called dibs about 3 years ago so I have to be nice to him :-).
@Paul – ah….. lucky you – I’d love to go. Well think of it like this – even if it’s at parity, you’re still not paying anything “extra” – so nothing to complain about! Unlike us Canadians who always lose money coming south:)
@Paul @Tomas I far prefer Sierra Trading Post over REI for pricing. There are often coupons for 15-25% off online for Sierra, just run a search.
Yeah very true @Squawkfox, I have REI’s surrounding me and my good friend works at the Flagship store in Seattle and scores me stuff from their “garage sale” and it’s like a gift to me when I get my 10% dividend from them every year.
I tell ya fellow Canadians, you guys should seriously look at being rental property in blown up places like Las Vegas, Miami, San Diego. It’s such good value now.
The Chinese are coming to San Francisco and slowly but surely buying all the prime SF real estate. They’ve already bought up Hong Kong, Taiwan, and Singapore!!
@FinancialS – yep – many Canadians are too, esp. in places like Florida. Of course, there’s good value in Detroit too – but who wants to move there (sorry, Detroiters!). *Starbucks* can barely stay afloat in that region. It’s like the Katrina no one speaks about.
Hi MoneyEnergy – We Americans welcome our Canadian friends to buy as much US assets as possible and save us from ourselves! :)
Don’t bother with Detroit! Focus on San Diego, Miami, Vegas, for the best deals. If you want to buy in the best city in america, come to San Francisco! :)
Hope to see you at FS again.
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