Canadian exporters and investors are coping with a Canadian dollar that remains close to parity with its U.S. counterpart, according to a survey released today by Export Development Canada (EDC).
EDC’s Trade Confidence Index, a semi-annual survey of Canadian exporters and investors, looked at how the Canadian dollar affects Canadian companies involved in global trade.
Peter Hall, chief economist for EDC, said, “As each day brings new headlines about what is buffeting the loonie, it has fluctuated between US$1.06 and US$0.96, a huge challenge for exporters trying to manage currency risks on transactions.
“I think what the survey is telling us is that they feel the higher dollar is here to stay, and they’ve accepted that and incorporated it into their operational plans. But the day-to-day volatility is hurting their bottom lines.
“Why so volatile? One key mover in 2011 has been commodity prices, with a big oil price spike occurring earlier this year on fears of production disruptions due to the Arab Spring. Also, the ‘halo effect’ created by Canada's strong fiscal and financial fundamentals has attracted ‘safe-haven’ investment to the loonie, boosting its value.”
The survey revealed that medium-sized businesses reported the greatest impact of a high dollar on their export sales, 10% more than small or large businesses.
Hall noted EDC’s forecast for the Canadian dollar was an average of US$1.03 in 2011 before declining to US$0.98 in 2012.
Jennifer Harrison
@JHarrisonBIV