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Canadian, U.S. Dollars Reach Parity

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In the wake of Federal Reserve Chairman Benjamin Bernanke cutting the federal funds rate by half a percentage point there dollar--already weakened against many foreign currencies--has fallen even further. For the first time since 1976, the U.S. dollar and the Canadian dollar have reached parity.

And there is a retail real estate connection to all this. For decades, U.S. residents have crossed into Canada to take advantage of exchange rates to go shopping and snatch up items for less than they could buy them in the U.S. Now, the situation has reversed. As the Canadian dollar has appreciated, Canadians have gained purchasing power in the U.S. So they are now coming South to do their shopping.

The high Canadian dollar will increase the number of cross-border shopping trips as Canadian consumers come to the U.S. to buy clothes, shoes and electronic gear. Many goods in Canada haven't been reduced yet to reflect the rising Canadian dollar.

"It's going to take some time before it trickles down to us," said Linda An, who calls herself a shopaholic. "Shopping, especially for big ticket items is great now in the U.S."

The high dollar will hurt Canadian manufacturers who sell goods in the U.S. Canadian Auto Workers economist Jim Stanford warned that the sector, largely based in Ontario, will lose hundreds of thousands more jobs if the dollar remains at current levels.

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Elaine Misonzhnik

Senior associate editor Elaine Misonzhnik has been writing for National Real Estate Investor since June 2006 and has covered commercial real estate for more than 12 years. She first became...
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