A Soaring Canadian Dollar Part 1!

Well folks, the Canadian dollar has been floating around par with the almighty U.S. Dollar. What does that mean for you? What does it mean for our economy? I'm not a financial genius, but it is my opinion that the only way for Canada to continue to keep our dollar at par or very close to par is to increase our GDP.

For those that don't know what GDP is, it is Gross Domestic Product. It is affected by imports and exports. Imports generally reduce the GDP while exports increase the GDP. This is just a brief synopsis of what GDP is. For more information on what GDP is go to Wikipedia to learn more. The most important thing to remember in my opinion is to consume Canadian made products, this will increase our GDP and overall help our economy to grow.

Now, what does the Canadian dollar trading at par mean for you? Well simply put, since products in U.S. markets are generally cheaper, it could mean more trips over the border. With all the border issues between Canada and the U.S. it would be a good idea to have a passport handy when travelling over the border. Even though the U.S. and Canada have generally good relations, having a passport to enter another country should be widely practised. You wouldn't go to another country with out one, so why should you go to the the States with out one?

The problem with a high Canadian dollar is that it tends to drive business south of the border. Labour costs are cheaper in the States and with a decreasing profit margin, more and more companies will be considering moving back across the border. As Canadians, we are going to have to invest more into our Canadian business' to support a stronger dollar. But with our dollar so high, some prices on commodities should be on a downward slope making your dollar go further. But will companies voluntarily reduce the price of their product? If we want to continue to trade with the U.S. they should, because they are not going to want to purchase Canadian goods at Canadian prices.

To be continued....