Loonie increases over past year having a positive effect on Saskatoon businesses

Since the start of the COVID-19 pandemic, the Canadian loonie has been steadily climbing towards the dollar mark when compared to American dollars (USD).

Currently sitting at 83 cents, it’s the highest level it has been at since March 2017. This is up from the 69 cent mark it was held at in March of last year.

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USask economics assistant professor Enchuan Shao says this is due to the heavy global demand for all goods and services right now.

“From that angle, you will see that will contribute to a strong expectation for our loonie,” said Shao.

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Shao adds the higher price is great for our exports and can be related to a number of factors, such as Canada being in the economic recovery stage of the pandemic and high global demand for all goods and services as more countries begin their plans to recovery as well including the United States, one of Canada’s most essential trading partners.

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“Commodity prices, energy prices hiking up is mainly due to high [global] demand,” Shao said.

Saskatoon bike shop Doug Spoke ‘N Sport has experienced a shortage of all their bikes and parts due to the pandemic.

Salesperson and technician Teal Kreuger says nearly all their products come from outside the country, so with the recent gains of the loonie, the shop and their customers would see some deals on bikes in the short term.

However, the lack of product on the shelves and rise in cost to make the bikes has added to a higher bike cost.

“We’re not going to see any impacts in the actual prices available at a whole price or a retail prices changing for six months and up to a year,” said Kreuger.

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Prairie Proud founder Cole Thorpe told Global News that with multiple vendors within Canada dealing in American currency, the higher the loonie, the potential for more money saved over the course of a long period of time.

“[If] I had to give an estimate, I would say it’s hundreds to thousands of dollars over the course of a year for small businesses like us,” Thorpe said.

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Thorpe says this would be a gradual add-up in savings but very beneficial for the business, especially during the pandemic.

“We would put that back into our business for everyday operations.”

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Shao says he thinks the loonie will continue to climb for the time being based on what the Bank of Canada has stated for the remainder of the year.

In fact, the Bank of Canada said in a statement it could be until the latter end of 2022 before everything starts to balance out including inflation rates.

“Taking into account the improved economic outlook and the considerable slack that remains, Governing Council judged (said in April) that the economy still needs extraordinary monetary policy support.”

“We remain committed to holding the policy interest rate at the effective lower bound until economic slack is absorbed so that the two percent inflation target is sustainably achieved.”

© 2021 Global News, a division of Corus Entertainment Inc.

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