TORONTO — With Christmas travel around the corner, the slumping Canadian dollar is a disappointment to vacationers waiting for flights at Toronto’s Pearson International Airport Tuesday.
“I lose 30 per cent of my money, it’s pretty sad but what are you going to do?” one traveller told Global News, resigned to the realities of the latest news about the currency’s decline.
“It’s not like I can change anything,” he shrugged.
Canada’s dollar has slumped to its lowest level in more than a decade, worth less than 74 cents U.S.
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A few years ago, the Canadian dollar was actually worth more than the U.S. dollar — leading thousands of Canadians to buy property in places like Florida and Nevada.
Rahmi Madhavji, the president of Knightsbridge FX, a Toronto-based foreign exchange company, says the dollar’s latest drop is effecting clients psychologically and in their wallets, where it counts most.
“We’ve seen a lot of people make commitments, whether it’s Florida real estate or students studying internationally,” said Madhavji.
“They made these commitments at par and now they’re getting a little bit burned and we’re definitely hearing them cringe about that.”
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Stephen Poloz, governor of the Bank of Canada told a Toronto audience that economic data “are a mix” and that the “shock we’re dealing with is a very complex one with both negatives and positives.”
Poloz said the bank is not considering an interest rate adjustment to deal with the dollar, but he told reporters the possibility of imposing sub-zero interest rates is not beyond the realm.
“We’re making sure that our toolkit is up to date and so that people understand what degree of flexibility we do have should there be some significant negative shock for the economy,” Poloz said.
“By that we mean something significant on the order of significance that happened in 2008.”
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Douglas Porter, chief economist at BMO Capital Markets said falling oil and resource prices are main contributing factors to the lower dollar.
Canadians hoping for the dollar’s return to parity with the U.S. dollar may have a long wait.
“It’s going to be a long tough slog to get some of that back and I’m not sure we’re ever going to get back to the glory days that we saw in the late 1990’s and early 2000’s when auto production was at an all time high and when the tech sector was booming,” said Porter.
Worse, for travellers and others who need to buy U.S. dollars, is the probability the dollar will have even less value in the days ahead.
“If oil prices continue to sink I think we can’t rule out something in the high 60s,” he said.
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