Apr 20, 2016
Pattie Lovett-Reid: Why the loonie’s rally is personal
ANALYSIS: As the Canadian dollar nears the 80-cent US mark, we all start to perk up a little. Sure, it may not be as good for our exporters -- and oil prices are still depressed. But the loonie’s downward trajectory has made consumers reluctant to spend on travel and life’s other pleasures. After all, fear of job losses spreading beyond the energy sector and a low dollar signal to many that it’s time to hunker down. A low Canadian dollar is also symbolic, suggesting tough times call for tough changes not only to corporate balance sheets but personal ones as well.
For many, the harsh reality is every cent counts when it comes to their personal finances. Over the past year, many Canadians may have altered their food choices, opting for alternatives to the high cost of fresh fruits and vegetables imported from the U.S.
Travel plans have been put on hold in favour of staycations. Some have thought twice about buying real estate given the low dollar is making Canada a destination of choice for many foreign home buyers, which is fueling sky-high price appreciation in some markets.
Now, don’t get me wrong. No one wants to see the economy stall and our exports hurt with a dollar that is trending higher. And the loonie still has a long way to go before it’s anywhere near parity. However, as the dollar gets closer to 80 cents U.S., it just might be the sweet spot for the Canadian economy. We begin to feel a little better about spending without the threat of a recession looming, our travel plans spring to life as we contemplate traveling outside of Canada, Americans still can come to Canada and feel they are getting a deal and once again we might consider buying fresh fruits and vegetables.
Money is personal and every financial decision we make has an emotional element to it. So as the dollar strengthens we start to feel a little better about our economy and when that happens consumption patterns start to change -- and investors, businesses and average Canadians start to feel like they’re getting the biggest bang for their buck.
As the Chief Financial Commentator for CTV News, Pattie Lovett-Reid gives viewers an informed opinion of the Canadian financial climate. Follow her on Twitter @PattieCTV
