Free Post #2

I am very interested in the fluctuating Canadian dollar and I like to read some articles on that subject when I have the time. Recently, I have come across a very interesting one that can be found here.

Basically, it talks about the Federal minister of finance, Jim Flaherty, who encourages Canadian retailers to lower their prices in order to reflect the value of the rising loonie. In the last months, Wal-Mart and Zellers both announce they would lower their price in order to accomodate the consumers and reflect the strength of our dollar. In the article, Flaherty also mentions that it is up to the consumer to find good deals. If he is not satisfied with the prices of a certain product in Canada, he has the freedom to look in other markets to find a better deal. Another important fact mentioned in the article is that people are putting a lot of pressure on car dealers to have access to lower prices. Therefore, the Big Three in that industry, Ford, General Motors, and Chrysler, will probably respond to that shortly because the pressure is getting very strong.

Personally, I think it is very nice to see that our minister of finance tries to influence retailers and store owners to let us take advantage of the rising dollar. I also think that the fact that Wal-Mart and Zellers are following the trend of the dollar is a key thing in this case, because if the other stores want to keep competing with them, they will need to follow their lead and do like them. I also believe that Canadians can change things in a certain way. If they complain but keep buying products in Canada, there will be no big impact on the situation. However, if people start looking for better deal in other countries, things will change rapidly. Moreover, with today's technology, it has become much more easier to order things online and it is very affordable. In most of the cases, because of the powerful loonie, ordering online will result in good savings on most of the products. A very good example of buying a product in another country in order to save money would be the car market. When I was back in Quebec, during the Christmas break, they were interviewing people on the news and these people were claiming to have saved as much as $5000 on a car only because they traveled to the States to buy it. The savings one can benefit from in this market are so big that most of the car companies in the U.S. have told their salesman not to sell to Canadians. Therefore, this puts tons of pressure on car dealers in Canada, and I believe that their prices will probably drop soon enough because otherwise they will lose lots of money as consumers will not want to pay more than their southern neighbors.

All of this can also be linked with tourism. Since our only neighbor is the USA, this country represents our main source of revenue as for tourism. The Americans already lose money when exchanging currency to come here, so I think that if on top of that everything is overpriced it will have an even worse impact on our revenue. The rise of the loonie is probably a very good thing for Canadian consumers, but for tourism it is the opposite as they get no benefit at all from it. I think that good price drops on the goods in Canada seems to be the best solution. It would contribute greatly to attract more tourists and would make Canadian consumers very happy. I believe that it is only a question of time for the prices to drop, because companies just want to make sure that the loonie stays high, since a drop would mean big losses of money for them.

To conclude, I must admit that I am happy that the Canadian dollar is rising because I do not own a touristic store or do not really care about tourism in Canada. For me, the strength of the loonie can only be a good thing and I hope it keeps going up.

Thanks for reading,

Chris