Why you need to take advantage of the Loonie being at Parity NOW!

You will probably see a lot of hoopla tonight on TV (or even now on the radio) about the Loonie finally reaching parity with the US dollar.  The Canadian Dollar touched $1.0001 USD today (at the time of writing – it may have touched or even closed higher by the end of the day).

MoneyClipCanadianDollars.jpgThere is a reason as to why you might want to take advantage of this RIGHT NOW.  According to analysts, it will take about two years before the marketplace catches up and starts to appropriately price items to reflect the breaking of this psychological barrier.  Even now when you look at books at a bookstore you will see two prices – one in US dollars and one in Canadian dollars, and the Canadian price is still around 25% MORE than the US prices!

This pricing mismatch means that either prices will come down slowly here over the next two years (which means we are overpaying if we purchase goods in Canada) OR prices will rise in the US (which means the bargain of shopping THERE decreases over time).  Since a general level of price increase is the very definition of inflation – something most people don’t want – the increase in prices in the States seems less likely than a decrease in Canadian prices.

MoneyUSDollars.jpgIn fact, what will MOST likely happen will be the prices in Canada won’t increase going forward as much as prices in the States increase and a more accurate marketplace will take a few years to develop. To cut to the chase: The 2007 US Thanksgiving sales might be the best buying opportunity for Canadian Cross-Border Shoppers! Not only are things on super-sale, our currency purchasing power adds another 10-20% on top of the listed discounts – so get down there any BUY to help stimulate the US economy… :)

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Preet Banerjee
Preet Banerjee
...is an independent consultant to the financial services industry and a personal finance commentator. You can learn more about Preet at his personal website and you can click here to follow him on Twitter.
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  • PJ

    Don’t forget that there is also a sales tax savings….Not many US counties charge 14% (as is for Ontario) on goods purchased.