The rising Canadian dollar is impacting tourist towns that rely on U.S. visitors, business owners in the B.C. Interior say.
Business from Americans is probably down “somewhere between 25 and 40 per cent. I mean, it’s a significant number,” said Clive Jackson, who owns a restaurant and pub in Nelson.
“You can look down the street … and you don’t see a Washington State [licence] plate. A few years ago, every second or third car would have been a Washington plate.”
Tom Thompson, who runs the Nelson visitor centre, said American visits to the centre have plummeted.
“When you look at the numbers coming into this visitor centre, we’re down about 10 per cent,” he said. “But if you just look at Americans, we’re about 25 per cent down from 2010 and 40 per cent down from 2009.”
A soft U.S. economy and confusing passport rules at the border have hurt business, and now the rising Canadian dollar is making things worse. Spending by international visitors in Canada, the largest segment of whom are Americans, declined 3.5 per cent in the first three months of this year, Statistics Canada said last month.
Many Canadians are also taking advantage of the strong loonie by heading to the United States. Margaret and Ken Wonko have already stocked up for their upcoming Alaska holiday.
“I was quite excited,” Margaret Wonko said. “I only got $500 American, but I only paid $484 Canadian. I was quite excited, actually.”
“This would be the time to think about pre-buying American money,” Ken Wonko said.
U.S. debt impasse driving up loonie
Analysts say the impasse over the U.S. government’s debt ceiling is driving up the value of the loonie. As legislators in that country remain deadlocked over how much to cut spending and how much to raise taxes, with an Aug. 2 deadline for a deal fast approaching, the loonie could soar even higher.
The buoyant Canadian dollar rose to $1.06 US on Tuesday and has gained about five cents against the U.S. dollar over the past month.
“The dollar can move very quickly in a short period of time — one cent, two cents, even three cents in one day,” said Helmut Pastrick, the chief economist with Central 1 Credit Union, a trade association for B.C. and Ontario credit unions.
“We’ve seen that in the recent past. If this debt ceiling crisis remains unresolved, it could easily pass the previous high.”
In 2007, rising oil prices propelled the Canadian dollar to its modern-era intra-day high of just over $1.10 US before it closed at $1.08.
In recent months, as the U.S. debt crisis brewed, the loonie has ticked up again — closing at its strongest in more than three years.
But the longer the U.S. debt deadlock drags out, the worse it could be for Canadian exporters, whose goods will cost more to buy in their biggest market:
“Nearly half our economy is trade, and about three-quarters of that is with the U.S., so there would be a significant impact there,” said Peter Buchanan, senior economist with CIBC World Markets.