Archive for the ‘Foreign Currency’ Category

Opportunity Knocks in purchasing property in the US

Friday, October 15th, 2010

Opportunity for many Canadians to purchase American real Estate is becoming increasingly apparent as the Canadian dollar continues to rise against the American green back.  In the near future we could see the Canadian dollar as high as $1.15 to $1.20 US.   Contact me if your looking for real estate specialists in the sun belt areas as I have many contacts that can help you and answer many of your questions in purchasing real estate abroad.

Below is an excellent article on the advantages and dis-advantages of a rising loonie.

Is the Canadian dollar headed to US$1.20?

by Tom Fennell, Yahoo! Canada Finance
Thursday, October 7, 2010

A currency war is raging around the world as central banks attempt to keep their country’s exports competitive by letting the value of their nation’s money collapse.

The Canadian dollar (a.k.a the loonie) is one of the few exceptions and is rising in value almost daily against the falling U.S. dollar.

So where is the loonie, which just a few years ago was trading at US$0.62, headed in a world where most of its competitors seem determined to devalue their currencies?

Many leading analysts believe the dollar is actually at a crossroads that could see it shoot has high as US$1.20 over the next year.

On the one side, demand for Canadian exports like oil, copper and potash are rebounding.
And with Canada’s national finances and banking system in great shape compared to many countries, the loonie is increasingly in demand as a safe-haven currency.

And now as the value of the U.S. dollar continues to erode as the U.S. economy falters and Americans continue to borrow massively, it is putting upward pressure on the Canadian dollar as it climbs in value against it.

How far can the U.S. dollar fall?

Some analysts believe another round of stimulus spending in the U.S. with borrowed money or yet another massive deficit could trigger a precipitous fall in the greenback, and with it a corresponding rise in the value of the Canadian dollar.

The U.S. already owes $13 trillion, and the $1.3 trillion deficit it’s running this year is the largest in 65 years.

Ross Healy, CEO of Strategic Analysis Corp., appears to have made the right call when he predicted during an earlier up-leg in the value of the Canadian dollar that if the U.S. Federal Reserve continues to pump money into the economy, “I could make the case for the Canadian dollar going to US$1.20. It’s in the numbers.”

While not quite as bullish on the dollar as Healy, by this time next year, Patricia Croft, chief economist of RBC Global Asset Management, sees the Canadian dollar rising to US$1.15 due to tighter monetary policy in Canada, a fundamentally better fiscal position and stronger commodity prices.

Croft also says other forces are at work. The U.S. dollar, she believes, is headed into a long secular bear market that she says will occur as countries abandon the U.S. dollar for safer investments.

While the U.S. believes that China is triggering the currency war by deliberately undervaluing its currency to boost exports, Yu Yongding, the respected former advisor to the Bank of China got a lot of people’s attention last week when he said China should stop buying U.S. debt issues and diversify its massive foreign currency holdings.

The U.S., he said, is close to a full blown currency crisis, as debt levels in the world’s largest economy continue to climb to record levels.

“The situation is worsening day by day,” Yu said in a speech in Singapore. “We’re one step nearer to a U.S. dollar crisis.”

A surging loonie would be disastrous for Canada’s manufacturing sector, which according to the Canadian Auto Workers Union, has already lost hundreds of thousands of jobs.

And short of an outbreak of inflation a surging dollar would almost certainly keep Bank of Canada Governor Mark Carney from raising interest rates. While he did not comment on interest rates directly, he told CNBC recently that “what goes on in the United States does have significant impact on Canada and we’re watching it very closely.”

Here is a list of advantages and disadvantages that will accompany a soaring loonie:


Canadians travelling abroad particularly to the U.S. will have their purchasing power dramatically increased, with an extra $15 to $20 to spend for every $100 they take with them.

Consumer goods

Just when you thought flat-panel TVs couldn’t get any cheaper electronics will continue to come down in price.

Cars and trucks

Canadian auto retailers will have to cut their prices to reflect the stronger dollar or risk losing customers to the U.S.


Any product made from oil and sourced in U.S. dollars will come down in price.

NHL hockey teams

When it comes buying players they’re suddenly more competitive.

Some things that won’t get cheaper with a high-flying loonie include:

U.S. equities

Canadian investors holding U.S. equities could see their profits wiped out by a higher Canadian dollar.

Companies selling to U.S. customers

Canadian manufacturers may not be able to pass along the cost of a higher dollar to their U.S. customers.

Forest products

The forestry sector, already hard hit by the multi-year decline in U.S. home construction, could be hurt again as the Canadian dollar prices them out of the American market.

Oil and gas

Energy is priced in U.S. dollars and all that crude flowing south won’t earn Canadian producers as much.


Michael Pino (Edmonton Luxury Properties), Re/Max Elite
#17, 8103-127 Avenue, Edmonton, Alberta, T5Y 3K6
Tel: 780-406-4000   Cell: 780-238-8912   Fax: 780-761-4433   Email: Click Here
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