For the past 5 years, our Canadian dollar has been hovering between $0.90 to around $1.05 USD. From the last half of 2014 until now, our dollar has been dropping significantly and is now currently at around 76 cents US.
Source: http://www.theglobeandmail.com/report-on-business/top-business-stories/death-of-the-canadian-dollar-the-five-stages-of-grief/article25817008/
The Canadian currency is commodity linked and is dependent on our oil. As oil prices rose during the years, the Canadian dollar also grew stronger. Suddenly OPEC started to produce above its target and the global market now has an oversupply of oil. In addition, the US output has yet to slow down. This excess oil has dropped the price of oil and in turn decreased the value of our dollar.
Source: http://www.hei-global.com/oil-procurement/
Canadians also depend on exports. With the depreciation of the dollar, foreign investors are not buying as many Canadian resources due to the low purchasing power. The trade deficit has increased to $3.3 billion as of May 2015.
Source: http://www.theglobeandmail.com/report-on-business/top-business-stories/death-of-the-canadian-dollar-the-five-stages-of-grief/article25817008/
On the contrary, the low dollar is attracting foreign tourists. Traveling to Canada is now affordable and travel agencies are noting the increase in demand. Also, Canadians are traveling within Canada due to the exchange rate. With an increase in tourists and the retention of Canadian citizens over the summer, Canadian companies are still managing to make good profits.
Source: http://www.hellobc.com/victoria/things-to-do/parks-wildlife/whale-watching.aspx
With this sudden shock, it lets us realize how dependent Canada is on our natural resources. But the Canadian dollar has always fluctuated and it is only a matter of time before it slowly starts to climb back up. The only question is, “How long until that happens?”
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