Economists say the Canadian dollar is at a B次元官网网址榮weet spotB次元官网网址� after rising for seven straight days to top 81 cents US, a point where it benefits consumers but doesnB次元官网网址檛 hurt businesses too much.
The loonie traded for 81.34 cents US Thursday, the highest level since February 2018. ItB次元官网网址檚 been above 80 cents US since last week.
Colin Cieszynski, chief market strategist with SIA Wealth Management, said it is important to remember that the Canadian and U.S. dollars were at parity only a decade ago, so businesses wonB次元官网网址檛 be hurting too hard just yet.
B次元官网网址淚tB次元官网网址檚 not a huge negative for business yet. In and around the high 70s and low 80s has historically been a sweet spot for the dollar,B次元官网网址� said Cieszynski.
B次元官网网址淐anadian businesses get to benefit on the dollar, but consumers arenB次元官网网址檛 getting crushed on the exchange rate.B次元官网网址�
He pointed out that Canadians still buy a lot of products imported through from the United States, even with current pandemic-related border restrictions in place.
Analysts nonetheless pointed out that COVID-19 is disrupting some of the usual consumer trends around a strengthening loonie, such as its effect on cross-border shopping and tourism.
With the increased use of e-commerce in the retail sector, BMO Financial Group chief economist Douglas Porter said Canadians may more often look to U.S companies when shopping online.
Porter said he believes the strength of Canadian commodities like lumber could continue to drive up the loonie.
B次元官网网址淭hereB次元官网网址檚 a lot of things that are driving the currency, but probably Number 1 is just the widespread strength weB次元官网网址檙e seeing in commodity markets,B次元官网网址� said Porter, saying high wheat and copper prices have contributed to the strengthening dollar.
B次元官网网址淎ll kinds of things that Canada exports are at record highs or at multi-year highs.B次元官网网址�
He said the current exchange rate may not yet represent the full strength of the Canadian economy, meaning it could have further to go in the short term.
Alan Arcand, chief economist with the Canadian Manufacturers and Exporters, said the short-term effect on manufacturers is ambiguous because they both import and export goods as part of their process.
But there could be impacts on manufacturers from a higher loonie down the road.
B次元官网网址淭he negative impact is generally gradual and long-term, said Arcand.
B次元官网网址淚tB次元官网网址檚 not really going to affect near-term production decisions, itB次元官网网址檚 more like it affects long-term investment decisions,B次元官网网址� he said, playing a role in decisions about where itB次元官网网址檚 cheaper for businesses to invest.
Both Arcand and Cieszynski shared the view that the current economic climate favours short-term rises in the loonie.
Cieszynski said CanadaB次元官网网址檚 natural resource industry will continue to benefit as the world looks to re-open thanks to ongoing vaccination efforts.
B次元官网网址淭he most important thing is the crisis stage of COVID appears to be ending and the focus is turning more towards opening and recovering, and that helps the loonie,B次元官网网址� said Cieszynski.
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