Jack Mintz: A sinking dollar is Trudeau’s latest legacy
A sleeper election issue is our sinking dollar, which fell this past year by nine per cent against the U.S. dollar, reaching its lowest level since April 2003. It nowtakes $1.44 in Canadian dollars to buy one U.S. dollar. Flipping it over, $1 Canadian dollar costs just 69.4 U.S. cents.
Last new year, it took “only” C$1.33 Canadian to buy an American dollar (or 75 cents U.S. to buy C$1). So, if you imported a US$30 video game last year, you only paid C$40 plus GST/HST. This year, if you paid the same U.S. price, you’d better be ready to dole out C$43.20 — plus GST/HST when the gimmicky holiday is finished next month.
A low dollar is not something to be proud of. It’s another signal the world is less willing to hold Canadian dollars. We are not in as bad shape as countries with collapsing currencies, such as Turkey, whose lira has plummeted 45 per cent in the past two years, or Brazil, where the rial is down 25 per cent over the same period. We’re more like slow-growth Euroland and Australia, which saw their currencies devalue against the U.S. dollar by 5.3 and 8.3 per cent, respectively, in 2024.
A depreciating dollar has several effects on the economy. Exporters earn more profits since they receive more Canadian dollars for goods sold abroad. On the other hand, Canadians importing goods and services face higher Canadian prices, whether for fruits, vegetables, computer equipment or touring abroad. On the capital account, Canadians have been investing more abroad than foreigners are willing to invest in Canada.
We are poorer relative to the rest of the world when the Canadian dollar depreciates. Measured in U.S. dollars, our per capita incomes fall, making it more attractive for our best and brightest to move south to
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