Fifty-eight per cent of B.C.’s small businesses plan to capitalize on the high Canadian dollar by upgrading their processes, equipment and machinery, according to a survey released today by BMO Bank of Montreal (TSX: BMO, NYSE: BMO:US).
“Parity with the U.S. dollar represents a significant opportunity for Canadian entrepreneurs to enhance their productivity by upgrading or refreshing their equipment,” BMO Commercial Banking vice-president Cathy Pin said in a news release.
“A strong Canadian dollar provides additional purchasing power when importing this equipment and purchasing supplies and inventory from the global market.”
The survey also noted that B.C.’s small businesses are more likely than their counterparts elsewhere in Canada to capitalize on the high dollar by expanding their operations across Canada, with 37% noting this as their plan.
Also, 21% of B.C.’s small business owners plan to parlay the high dollar into an expansion into either the U.S. or Mexico. A further 21% of B.C.’s small businesses plan to increase their staffing levels.
The survey notes, however, that no small businesses in B.C. plan to take advantage of the high dollar through an overseas expansion or by buying more imported products.
BMO Economics is forecasting that the Canadian dollar will stay above parity for 2011.
“We expect the Canadian dollar to appreciate modestly further and trade about $0.05 above parity against the U.S. dollar later this year in response to high commodity prices, rising interest rates from the Bank of Canada and Canada’s relatively good fiscal standing,” BMO Financial Group senior economist Sal Guatieri said in the release.
“However, the currency will likely return to parity by late next year as a result of Canada’s moderately high trade deficit and expected monetary tightening by the Federal Reserve.”
Calls to BMO were not returned by press deadline.