The Canadian dollar has been sliding since mid-October, which could benefit British Columbia's manufacturing and export industries in the immediate term, according to the Canadian Manufacturers & Exporters (CME).
On Wednesday, the dollar dipped below US$ 0.934, marking its lowest level since May 25, 2010.
"Given that we are an exporting province, that could be a good thing," said Marcus Ewert-Johns, vice-president at CME's B.C. division. "Usually a lower Canadian dollar is good for exporters, as the foreign buyer has greater purchasing power.
"Several member manufacturers sell into the U.S., Asia and Europe, so their revenues are actually increasing."
As a specific example, sale prices of B.C. lumber on international markets are negotiated in U.S. dollars. "A rising U.S. dollar is good news for lumber exports," said James Gorman, president and CEO of the Council of Forest Industries. "It increases the purchasing power in the U.S. and it helps fuel demand for our products."
From a productivity perspective, however, the lower Canadian dollar may represent a missed opportunity for companies that didn't invest in new equipment when the dollar was high, Ewert-Johns said.
"Now that the dollar is falling, it will make it more expensive for manufacturers to buy equipment or supplies from foreign providers," Ewert-Johns said.
"In the longer term, the higher cost of inputs and equipment is another cost burden companies have to carry in addition to increasing property taxes, utility rates [and] administration of the PST," he said.
For businesses in general, the uncertainty in exchange rate fluctuations is a concern. "Something for US$100 costs one amount in Canadian dollars one month and another amount the following month," Ewert-Johns said. "The variability puts work extra work into a business plan."
