Lower Canadian dollar could hurt local retailers

Mar 6, 2014

The Canadian dollar continues to falter as it has for weeks, hitting lows against the greenback not seen in more than four years.  The downward trend is already having an impact and for many Canadian consumers and American retailers, it's not a good one.  

One of the first sectors to feel the pinch from a falling loonie since the beginning of the year is the air travel industry.  Big Travel and tour operators have been hiking prices. They were quickly followed by at least one airline. 

"A lot of the hotels as well as the airline fuel is negotiated in US dollars. So as the Canadian dollar drops there becomes a bit of a gap there, But when you see the dollar drop as much as it has, that gap becomes a little bit too large," said Brad Miron, vice president of marketing at Sunquest Vacations.
The Canadian dollar is down sharply compared to its US counterpart, hovering around the 90 cent mark.

If the trend continues downward there will likely be more price adjustments.

Some analysts have predicted it could still go much lower...closer to 80 cents.

The falling dollar could also hit cross border shopping.  A loonie that's at par means Canadians cash in on bargains south of the border where prices are generally lower. Now with less buying power and factoring in the cost of the trip, as well as more aggressive marketing by Canadian retailers, Canadian consumers might decide to stay put.