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 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

Just Posted

Volunteers risk their lives to save others

SAR training prepares them for the job

Many moving parts to economic development

Tourism is only part of the answer

Window art a sign of the season

B.C. artist paints windows across the province

Get all your stocking stuffers, and the stockings, too

Beta Sigma Phi Christmas Craft Sale returns

VIDEO: Fraser Valley Bald Eagle Festival

This year’s event featured six stops, including viewing points and activity centres.

Methadone treatment not as effective for mentally ill, homeless: study

SFU study suggests unstable housing makes it hard to stick to treatment regimen

Wet weather expected for much of coastal B.C.

The Weather Network is calling for up to 200mm of rain to fall in some areas of the South Coast and Vancouver Island

B.C. reporter reflects on covering Charles Manson

Charles Manson, leader of a murderous cult, died on Sunday at 83

Port Mann, Golden Ears traffic up since tolls removed: report

City staff report says congestion woes easing on Pattullo Bridge as a result

Convicted child sex offender’s sixth lawyer resigns before sentencing

One time school board candidate Corey Neyrinck case delayed in BC Supreme Court yet again

ICBC overbilling for crash repairs not the problem, dealers say

Collision repair shops reject union claim of inflated costs

TransLink mulls distance-based fares, low-income discounts

Metro Vancouver transit agency launches final phase of fare review

B.C. groups to address child sex abuse in sports

viaSport is organizing a full day of education in association with Canadian Centre for Child Protection and the Coaching Association of Canada.

Most Read