long term outlook of the cdn dollar

[electrom27]

I purchased around 10gs of american dollars back when the cdn dollar was par. I purchased it just for personal use. I;ve notice that the cdn dollar is at around 91 cents now. I don;t know if I should sell my american dollars or hold for a long term. It looks like it will reach parity again but for how long?

[Seanhfx]

Would have been best to sell when it was at .78 couple months back but who knew it would go up so fast., although that would have been a great return.... I think the cdn dollar is going strong against the US$ and in 2010/2011 we will see 1.15++...many factors, mostly oil will go back up above $100/barell once the economy gets rolling again and the US gov has really devalued their dollar lately with all the money they've printed.

I say sell now unless you are willing to take risk with the 10g's for years to come...one thing for sure if the dollar hits .80 again, sell sell sell sell :cheesygri

[pitz]

I'm thinking that the USD will drop so much in the next few years that we could be looking at $2 USD = $1 CAD. If not even worse.

The US has to eliminate its imports and become a net exporter for many years to come, to repay its debt to China. That means that the US cost of production for goods has to be lower than that of China. Or, alternatively, the US needs to come up some very high value exports. Both scenarios are highly favourable to science and engineering professionals, and are very poor for almost everyone else.

Its gonna be a really different world come a few years from now, IMHO.

[chenwaa123]

I'm thinking that the USD will drop so much in the next few years that we could be looking at $2 USD = $1 CAD. If not even worse.

The US has to eliminate its imports and become a net exporter for many years to come, to repay its debt to China. That means that the US cost of production for goods has to be lower than that of China. Or, alternatively, the US needs to come up some very high value exports. Both scenarios are highly favourable to science and engineering professionals, and are very poor for almost everyone else.

Its gonna be a really different world come a few years from now, IMHO.

Well, I wouldn't be surprised if we see 1.25 - 1.40 over the next 2.5 years...the US is F'd and this is going to be the death of many Canadian Exporters who have relied on the low dollar as a competative advantage.

[dealguy2]

I'm starting to think we might actually just head back to the situation we had before. I don't think we'll see a huge housing mania in the US or anywhere else again but I think we'll for sure go back to people leasing 50k SUVs and all that again soon. Some day this will end and China will stop buying the T-Bill but I don't think they're done yet. By the time China tires of the T-Bill America will have re-invented itself and will still be on top. I would not bet against America ever.

[dryang]

2 USD=1 CAD, are you guys serious? retailers will have zero business in canada.

[adamtheman]

2 USD=1 CAD, are you guys serious? retailers will have zero business in canada.

Pretty much. Once the dollar hits parity, cdns will rush the border and bring their money to the US... dragging the cdn economy down, with spending at an all time low.

[Bazooka Joe]

From what I see, it's self correcting. So much of our economy is tied up in agriculture and natural resources, with our single largest trading partner being the US. Additionally, the market buys and sells in USD, so even if we're say, selling gold to China, a strong CAD is not to our advantage.

As the CAD gets stronger vs. the USD, it decimates our largest source of revenue, which cools the economy and lowers the CAD. I can see it fluctuating from .80 to 1.20 depending on the lag between the two, but I can't see it sustaining a bigger difference than that.

In short, I think our economy is tied to the deck of the sinking ship that is America. That's just my 1.82 cents worth though.

[potato]

I agree with pitz, but the 50 billion deficit and other gov. actions will try to devalue our currency as well.

There is a worldwide race to devalue currency.
This is why I have been going gold and silver for a while.

[Galois]

I would expect to see parity within the next month and possibly as high as a $1.20 by summers end.

The CAN$ was already above parity before investors fled to the percieved security of the US dollar during the banking crisis. With the economy showing signs of improvement and investors moving back into markets this aberration will no longer hide the fundamentals of the US$ In the last year there has been MASSIVE US government borrowing, and the morally questionable practive of QE. Our governments recent deficit of $50 Billion is trivial in comparison and if the CAN$ was justified at parity last year it is hard to see how it will remain below that in the near future with oil prices rebounding.

Long term the adverse effects of the high dollar will begin to undermine it but in the short term it is likely to be more limited by oil prices. Worth remembering that as you go beyond $1.20 your going to need over $100 US oil again to be profitable after exchange, oil going beyond that will likely cripple the weak recovery in the US and throttle back demand.

The point that seems to be lost here is this devaluation of the US$ may very well be intentional, and in all likelihood inevitable. Decades of having a currency disadvantage to every major trading partner has sucked the US dry. This is over and we had better learn to compete on even terms.