Canadian dollar drops below par with USD

Canadian Loonie Pictures, Images and Photos The Canadian dollar (CAD) has been worth more than a U.S. dollar (USD) for many months now without letting up. This has forced Canadian businesses which export goods to the U.S. and other countries to make adjustments in their operations when possible because the strong dollar meant their goods were more expensive. Many export businesses in Canada suffered big losses as a result. As with everything, those that could, adjusted and have managed to still be profitable.

With the uncertainty in global markets, especially in Europe, everyone is looking for a safe haven to keep their assets. As is usually the case, that safe haven is the USD. This is the major reason why the USD has surged versus the CAD in recent days. This reversal of currency strength will give some Canadian exporters a much needed shot in the arm. However, others have already altered the way they do business to reflect the stronger CAD that has been here for months and will have to readjust once again.

There are two schools of thought on this issue. Some say that a strong CAD is good for Canada. Others say the opposite. I believe the CAD should be somewhat weaker than the USD. As a largely exporting nation, having a weaker CAD makes Canadian goods less expensive and allows the sales, which are in USD to yield those businesses a higher margin. This can translate into big money for a business when sales of an item reach high volumes.

Many economists are saying that the CAD will remain a little weaker than the USD for the next several months. If this continues beyond six months, then businesses in Canada will once again begin to adjust their companies back to the way they operated before the CAD surged in the first place. Overall, this can be a positive turn of events for Canada.