Author Topic: The Canadian Dollar  (Read 4282 times)

scottish

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The Canadian Dollar
« on: October 30, 2015, 04:59:10 PM »
Our current exchange rate (0.76 USD for 1 CAD) sucks.

2016 Toyotas have increased noticeably in price from 2015 Toyotas.   Now I have no urge at all to replace my 2004.  My favourite steak is now over $50/kg.  wtf?   $23 a pound for boneless rib steak?  Groceries in general seem ridiculously expensive.  And worst of all, my CAD denominated investments are worth almost 20% less than they were a year ago in real terms, even though they've gone up in nominal terms.

Has nobody noticed this?   We just had a federal election, and there was no, none, nada discussion about inflation caused by currency weakness.   Our new government promises to use cheap money to fix our crumbling infrastructure.   Aside from the usual worries about fiscal responsibility, this sounds like a good idea.   But is it going to help with the low dollar?

With falling oil prices, our exports are down.   This means that we have more trouble getting foreign currency.   This in turn means that it takes more Canadian currency to buy the same amount of US currency.   How can we fix this?   Does Canada need to develop products that have world-wide demand?   

Frugal D

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Re: The Canadian Dollar
« Reply #1 on: October 30, 2015, 05:01:48 PM »
Sounds like I'm booking a ski trip to Whistler soon.

scottish

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Re: The Canadian Dollar
« Reply #2 on: October 30, 2015, 05:07:11 PM »
Hah!   And I'm *not* booking a trip to Big Mountain.

lostamonkey

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Re: The Canadian Dollar
« Reply #3 on: October 30, 2015, 06:45:24 PM »
This is great for those of us that own American investments. A lot of my gains this year were just because of the changes in the exchange rate.

Goldielocks

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Re: The Canadian Dollar
« Reply #4 on: October 30, 2015, 07:06:49 PM »
It's awesome!  I am finally moving my US dollars back to canada. Crossing fingers for a bit more slide in the dollar next month.

But, it is impacting the cost for imported electric bike parts, my DH's manufacturing employer. Fuel costs, and cost of produce.

Otherwise, bring it on. 


scottish

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Re: The Canadian Dollar
« Reply #5 on: October 30, 2015, 07:44:11 PM »
Yes it makes the US investments look like they're doing well when you convert into Canadian dollars.
But how does this help if the cost of living is going up to make up for it?

Goldielocks

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Re: The Canadian Dollar
« Reply #6 on: October 30, 2015, 08:02:35 PM »
Yes it makes the US investments look like they're doing well when you convert into Canadian dollars.
But how does this help if the cost of living is going up to make up for it?

I have a whole IRA to bring over before the canadian rules change. COL for my mtg is fixed, we don't buy much, other than Christmas and those e bike parts we have planned , and groceries. 

All in, a 30% drop in dollar will cost me about $1200 per year. 

But, my salary should increase within 3 years to catch up. I am an engineer that already has a TN visa and 30% of my projects are in USA. So let's say $3600 loss, worst case, due to dollar, over three years.

Gain of $15k for every $50k U.S. investment converted/sold.

I am so far ahead, it is dance time.  The biggest problem is figuring out what to reinvest in, when most of my US investments are sold.
« Last Edit: October 31, 2015, 10:00:48 AM by goldielocks »

Retire-Canada

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Re: The Canadian Dollar
« Reply #7 on: October 31, 2015, 08:50:45 AM »


^^^ for some perspective. CAD to USD exchange has been much worse. The average exchange rate over this period is 1.22.


lifejoy

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Re: The Canadian Dollar
« Reply #8 on: October 31, 2015, 08:55:00 AM »
Upside: it has really put a kaibosh on my online shopping!!!

Retire-Canada

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Re: The Canadian Dollar
« Reply #9 on: October 31, 2015, 09:10:08 AM »
Yes it makes the US investments look like they're doing well when you convert into Canadian dollars.
But how does this help if the cost of living is going up to make up for it?

Well the simple answer is buy less of the things that are going up.

My mortgage costs didn't go up. Gas is no more expensive. My vehicle is paid for and I'm not buying a new one anytime soon. The only food item that's really expensive is meat and most of us eat way too much of that as is so a reduction here isn't bad.

I don't need to buy most consumer goods and the higher exchange for USD based goods is just extra incentive to save that money and invest it.

We changed our holiday plans this Oct from a US trip to a visit to the interior of BC.

I'm thinking of going to AZ to mountain bike this X'mas. I have done similar trips in the past and stayed at hotels. I'll probably camp this time mitigating one of the major USD costs for the trip.

The crappy exchange rate is turning out be very helpful motivation to save extra on non-essential items and invest in Canadian companies.

scottish

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Re: The Canadian Dollar
« Reply #10 on: October 31, 2015, 12:56:23 PM »
Well welcome to Canada, goldielocks.    It sounds like with the move this is a good time for you to purchase Canadian investments with your US investments.    where are you guys moving to?

Our biggest single expense is well, food.   That's probably why I notice the price increases so much.

I suppose the investing answer is to continue to maintain the asset allocation ratios and not worry about it beyond that.  :-) Stay the course!  It's really hard to remember the CAD being all the way down to 0.64 USD in 2002.

Goldielocks

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Re: The Canadian Dollar
« Reply #11 on: October 31, 2015, 02:47:20 PM »
Well welcome to Canada, goldielocks.    It sounds like with the move this is a good time for you to purchase Canadian investments with your US investments.    where are you guys moving to?

Our biggest single expense is well, food.   That's probably why I notice the price increases so much.

I suppose the investing answer is to continue to maintain the asset allocation ratios and not worry about it beyond that.  :-) Stay the course!  It's really hard to remember the CAD being all the way down to 0.64 USD in 2002.
We have been back in canada since 2008. And waiting for the dollar to improve ever since 2011 when our IRA were suddenly placed to restricted trading due to our bank making a new decision on non resident accounts.

I worked in essentially data analysis for a major grocery retailer through the low low Canadian dollar. Yes prices are affected by the exchange rate, but for U.S. imports first, then meat and fish which is sold in U.S. Dollars, like oil, internationally. Canada grows quite a bit of food, really.

 Grain, poultry, beer, eggs, milk are not affected much. Produce can jump, but the larger impact on groceries is actually world feul prices, and bad crops/ drought, or the use of crops to make energy instead of food.

Maybe some of the price jump you see is related to drought as much as anything?

kimmarg

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Re: The Canadian Dollar
« Reply #12 on: October 31, 2015, 03:44:47 PM »
It's really hard to remember the CAD being all the way down to 0.64 USD in 2002.
I paid university tuition in CAD with my USD from 2000-2004. It was pretty sweet.

BigBangWeary

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Re: The Canadian Dollar
« Reply #13 on: October 31, 2015, 11:59:36 PM »
Canada became very reliant on its resources and rode the commodity cycle that is now ending a bit too hard. Our dollar was strongly tied to the O&G boom that has now been put on hold for some time. Perhaps for a decade or more as China slows and Saudi looks to kill the competition.

Since the late 90s we have bled manufacturing jobs while governments have looked to stimulate the economy through consumer spending. With an underemployed service-based economy, those outside of government and resource extraction have been falling behind. The low interest rates have helped stimulate the FIRE industries, but with some of the highest person debt in the world, and a housing market that looks set to adjust, there are very few indicators suggesting we will be going back to the strong Loonie days for some time. Sure Trudeau et al can do something about this, but they are fighting against a number of headwinds and it will all take time.

As bad as things have been in the US, the average consumer has been dealing with debt, and innovation and small business is greatly encouraged (not so in Canada). For the foreseable future I see very little upside in the CDN for a a long time to come.

Retire-Canada

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Re: The Canadian Dollar
« Reply #14 on: November 01, 2015, 08:19:38 AM »
For the foreseable future I see very little upside in the CDN for a a long time to come.

I don't see the Canadian dollar doing anything radical against the USD, but at an exchange rate of ~1.31 today we are only $0.09 off the average exchange rate for these currencies for the period 1972 - 2015. Getting back to that level isn't out of reach.

Low commodity prices will force investment into other sectors. Short-term pain for long-term gain.

Hopefully all the Canadian MMM types are using a globally diversified asset allocation that provides protection against currency fluctuations. Only 30% of my investments are CDN. At the moment my AA is down in that area compared to my US and Int'l investments so I am putting my $$ there every month as I save/invest.


Jon_Snow

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Re: The Canadian Dollar
« Reply #15 on: November 01, 2015, 09:17:31 AM »
Considering my current location at latitude 23 N, longitude 110 W, just south of the Tropic Cancer, I'm happy to know that the Canuck buck has faired very well vs. the Mexican Peso. Both have suffered pretty much equally against the greenback.