The Canadian dollar has fallen to a 20-month low, but experts said it will have to fall a lot further before retailers on this side of the border will have to start worrying.
The “loonie,” as the Canadian dollar is called, fell 0.5 percent to 94.82 U.S. cents Tuesday, reaching the weakest level since Oct. 4, 2011.
But it would have to drop below 90 cents for Canadian consumers to even bat an eyelash, and below 85 cents before they begin re-examining cross-border shopping trips, said Walter Sendzik, chief executive officer of Greater Niagara Chamber of Commerce in Ontario.
“That’s when you’ll probably see more consumers closely paying attention to balancing the value of the good versus the price point of the Canadian dollar,” Sendzik said. “At 95 cents, it’s still a very competitive market to attract Canadian shoppers.”
Sendzik should know. He helped Canadian retailers launch a “1 less trip” campaign designed to encourage Canadians to cross the border a little less often to shop and to share the wealth with struggling Canadian retailers instead.
Canadian shoppers have greatly shored up the retail scene in the Buffalo Niagara region, as they spend day and weekend shopping trips stocking up on everything from clothing and sneakers to groceries, laundry detergent and gasoline. It will take more than a slight currency fluctuation to outweigh the price, selection and tax benefits Canadians reap by shopping stateside.
“They’re still coming, and I think they will keep coming unless something drastically changes,” said Betsey Bonvissuto, marketing director at Boulevard Mall.
The Canadian currency weakened after a report Friday showed Canada’s economy slowed in April, with 0.1 percent domestic product growth from 0.2 percent the previous month. A report showing that U.S. manufacturing picked up in May added to the currency imbalance.
Canada sends nearly 70 percent of its exports to the U.S.
Canada’s payrolls dropped 5,000 in June, according to a Bloomberg survey. That would compare with a 95,000 increase in May, the nation’s largest one-month employment increase in more than a decade.
“The data seems to be favoring the U.S. lately, and that’s seen Canada fall behind a little bit,” said Don Mikolich, executive director of foreign exchange sales at Canadian Imperial Bank of Commerce, by phone from Toronto.
“From the Canadian perspective, it makes it more competitive to move into the American manufacturing space,” Sendzik said. “Even a five-cent buffer is significant, especially with just-in-time manufacturing, where you’re producing as needed instead of stockpiling.”
This report contains material from Bloomberg News. email: email@example.com