Higher loonie hasn't 'registered'
http://www.financialpost.com/news/Higher+loonie+hasn+registered/4761341/story.html
Summary
This article talks about the loonie (Canadian dollar) and how it’s worth more than the American dollar, yet Canadian businesses still seem to be more than willing to accept the American dollar. For example, a convenience store owner who sells a lottery ticket to a customer who pays in US dollars makes almost no money on the deal. However, people cannot be blamed for it because the loonie has been below par for forever and people don’t view it as a permanent thing. People are expected to change though, because when retailers take it to the bank they will realize that they are losing 5 – 6% of profits on every transaction.
Connections
Money is the highlighting topic of chapter 7, as well as the involvement of banks in our economy. In this article, it is mentioned that you can simply buy 2000 dollars worth of US currency and just spend it at par for your best bang-for-buck. However, you have to find good rates in order to maintain your profit, because most banks have a higher buy rate (ex. 0.9843 Canadian for American at RBC). Also, it is important to note that by doing this exchange, we are increasing the supply of money in our economy and therefore our purchasing power would increase as well.
Reflections
Although our currency is currently very strong, people still haven’t realized this and have not begun taking advantage of this situation yet. However, Mr. Tal, deputy chief economist at CIBC World Markets, believes that retailers will change if this current exchange rate continues or if the loonie goes even higher. I agree with Mr. Tal that change will eventually happen, because our currency is obviously strong and it will simply take time for people to have faith in its strength and take advantage of it, for the betterment of the economy as a whole.
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