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April 6, 2010

Strong Canadian dollar boosts North Country tourism, retail

By JULIE BELTRANE and DAN HEATH

OTTAWA — Canada's solid economic fundamentals amid global uncertainty helped push the loonie to parity Tuesday, taking it slightly above the U.S. dollar in early morning trading.

Although the loonie kept straddling parity most of the morning — it reached as high as 100.12 cents U.S. in morning trading — analysts say Canadians should get used to seeing their currency at these levels for some time.

"Canada is the new Switzerland of stability, but with domestic assets the world wants," said Derek Holt, vice president of economics with Scotia Capital.

Holt said Canada's strong fiscal position, sound banks, improving economy and wealth of natural resources make the currency an attractive buy.

GOOD FOR AREA


The exchange rate is welcome news in the North Country. Michele Powers, vice president for marketing at the Plattsburgh-North Country Chamber of Commerce, said the timing couldn't be better, as the region prepares for summer tourists.

"They (Canadian tourists) tend to think of us as more of a summer destination," she said.

The favorable exchange rate coincides with a new marketing campaign to promote the Adirondack Coast, set to start this month. Powers said it will target the Montreal area on nine radio stations and a television station.

The chamber is also using Facebook to target residents of Montreal and its suburbs.

SUMMER GROWTH


Liquor and Wine Warehouse owner Steve Carpenter said the exchange rate is good news at a time when the economy, layoffs and state budget are hurting many businesses.

"This will maybe offset some of the money that is not being spent locally."

Carpenter doesn't expect it to have an immediate impact. The store's Canadian business really picks up once summer hits, he said, when tourists and shoppers from north of the border start to visit local marinas and campgrounds.

If it's a nice, hot summer, business could pick up by as much as 20 to 30 percent, he figures.

The relationship with Canadian shoppers has helped insulate the region during tough economic times in the past, Carpenter said, and appears ready to do so again.

SPUR TO DEVELOPMENT


Plattsburgh-North Country Chamber of Commerce President Garry Douglas said that in addition to boosting the tourism and retail sectors, the current exchange rate also facilitates cross-border investment and economic development.

"As Canadian companies once again start to experience increased business in the U.S., they are again considering whether it's time to establish a U.S. location, and the best time for them to do that is now when the dollar will buy more real estate and equipment than it did a few years ago or may a few years from now," he said.

"So, this is a definite plus for our region on the development front, as well. The chamber hosted two red carpet days (promotion) for Canadian companies this week alone."

EXPECTED TO LAST


The last time the dollar rose above parity, in the fall of 2007, it hovered at that level until July 2008 before becoming a victim of global financial crisis and losing 30 percent of its value in the slide that followed.

It will be different this time, said Bank of Montreal deputy chief economist Douglas Porter, with the duration measured in years rather than months.

"We have the dollar trading next year between U.S. $1 and U.S. $1.05," he said.

Malone Golf Club General Manager Derek Sprague said a similar shift two years ago was short-lived, so it would be great if it lasted longer this time around.

"Certainly for years when the exchange rate has been a 15 to 20 percent or more spread (in favor of the U.S. dollar), it was more favorable for Americans to go to Canada and more costly for Canadians to come to the states," he said.

"A strong Canadian dollar helps us because it makes it more effective for them to come down."

The club has about 120 Canadian members, Sprague said, and Canadians make up about 90 percent of daily greens fee play. The exchange rate could even help drive more spending on equipment in the pro shop, he said.

"I would say it would have to."

Although the loonie reaching par makes news, Porter noted that the currency has been hovering above 95 cents U.S. over the past two quarters, so any price effects will be relatively small.

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