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Canada Beckons With Favorable Exchange Rate

Sharon Drummond - dolmansaxlil
The greenback has recently strengthened against the loonie.


A trip across the border to Canada could have an added appeal right now with an exchange rate that has turned quite favorable for Americans.

But this cuts two ways. It might also lead to more Canadians staying home, which could hurt retailers in U.S. border counties.

Two summers ago, the U.S. dollar and Canadian dollar, affectionately known as the loonie, stood at parity. But since then, the greenback has strengthened as our economy gathers steam. And lately, the Canadian currency has slid due to weakness in commodity prices.

Today, your American dollar buys around 1.16 Canadian. Tourism Vancouver vice president Dave Gazley hopes that provides an incentive for Pacific Northwesterners to head north.

"We like to believe that when we see the Canadian dollar go down a little it is a bit of motivation for our U.S. friends in Washington, Oregon and our neck of the wood,” he said.

Gazley said his convention and visitors bureau is reluctant to highlight the favorable exchange rate in its advertising because the rate fluctuates.

The good news for American tourists might not be so great for U.S. border counties that benefit from Canadian shoppers. But so far there's not much evidence for a downturn, just a plateau in southbound border crossings from British Columbia.

"Looking at a couple of available data sources, it appears that Canadian visitation plateaued at the end of last summer, after several straight years of year-over-year growth," Border Policy Research Institute director David Davidson wrote in an email. "I believe that the exchange rate has to have been a contributing factor."

Davidson examined federal border crossing counts and his institute's regular "license plate survey" of Canadian-plated cars in retailer parking lots from Blaine to Marysville, Washington. The Border Policy Institute is based at Western Washington University in Bellingham.

U.S. Customs and Border Protection reported that total entries in personal vehicles from British Columbia to Washington state were 16,010,383 in the fiscal year just ended. Border traffic in the prior fiscal year, 2013, was virtually the same at 16,016,325 entries.

Gazley said his personal opinion is that it would take a bigger drop in the buying power of his currency to deter Canadian bargain hunters from traveling south. "Probably at the 75 cent mark (when one loonie equals U.S. $0.75) you might see a little bit of slowing down across the border," he said.

The Canadian dollar was worth 86 U.S. cents as of Christmas Eve.

Correspondent Tom Banse is an Olympia-based reporter with more than three decades of experience covering Washington and Oregon state government, public policy, business and breaking news stories. Most of his career was spent with public radio's Northwest News Network, but now in semi-retirement his work is appearing on other outlets.