Low loonie sparks concerns for some Alberta businesses, celebration for others

The Canadian dollar dropped to a four-year low this week, prompting mixed reaction in Alberta. 

The loonie closed at 1.40 against the U.S. dollar on Thursday — or 71.25 U.S. cents — marking its fifth straight day of declines.

Ryan Schoel, owner of Calgary's The Costume Shoppe, on Blackfoot Trail, says it's inevitable that Canadian consumers will see prices increase if the dollar stays low.

"The average Canadian doesn't really notice (the low exchange rate) until they go to buy something and it cost more," he said.

Schoel sells his product in Canadian dollars, but says he purchases it from both Canadian and American suppliers.

He says even his Canadian suppliers are most often buying their product from America.

"Everything we buy, it's an illusion that we buy it in Canadian dollars, we buy it in American (dollars) first," he said.

Schoel says he does what he can to mitigate the fluctuations, but there's only so much you can do.

Ryan Schoel, owner of The Costume Shoppe on Blackfoot Trail, says it's inevitable that Canadian consumers will see prices increase if the Canadian dollar stays low. "It is what it is, I guess."

On the other side

The low loonie isn't reason to panic for everyone. 

Travel experts say the industry has built in some contingency plans. 

"Most tour operators have already-negotiated rates," Onanta Forbes said. "Those have been in effect for two or three years, so customers won't have to react to the changes."

That being said, long-term lowering could spell trouble. 

"You don't have to worry about the fluctuation of the dollar too much right now while it's under contract," Forbes said. "But you could see in the future, currency surcharges that could come into effect if the dollar keeps on falling."

"We always recommend that you pre-book as much as you can in advance in Canadian dollars. It saves you money and it saves you time."

A booming local film industry is reaping the rewards in a more direct, immediate way. 

"We pay a lot of attention to how (the dollar) is fluctuating," Calgary Economic Development film commissioner Luke Azevedo told CTV News. 

He's in New Orleans this week pitching Alberta to film producers and executives, and says — paired with other strong incentives — people are listening. 

"Obviously, (the loonie) has an impact, but it's just one of the impact pieces. There's a variety of questions that we have to answer to ensure that we continue to be relevant, and we continue to be a location of choice, but it doesn't hurt that the dollar gives you some more opportunity to do more production in the region."

Years ago, a low Canadian dollar would've meant a boost for Vancouver's film industry and some side-effects for others in the country. 

That's no longer the case. 

"They know where we are now," Azevedo said. "We're in a good place from the perspective of the quality of work that's being done here, the value for the dollar or the Sterling or the Euro that's coming here."

In conclusion

The Ministry of Finance and Treasury Board acknowledges the impacts are a mixed bag. 

"A weaker Canadian dollar increases the price of imported goods, which raises costs for businesses and consumers that rely on imported goods," a statement said. "However, export-dependent sectors tend to benefit from a weaker Canadian dollar. Lower inflation and interest rates are likely to partially offset the impacts of a weaker dollar on Albertans."

One economist says the key word there is "partially."

Moshe Lander, a professor at Concordia University, says the impacts of a low loonie are more far-reaching and consequential than some people may realize.

While some Canadian industries — like tourism and film — may see more sales to international markets while the dollar is low, Lander says that in turn can cause adverse effects.

"Even if you say. 'I'm not planning on an U.S. getaway, what do I care (if the Canadian dollar is low)?' what you care is that there's an extra conga line of foreigners lining up to buy our stuff, and that could actually make Canadian prices higher too."

Lander notes that one of the last times the Canadian dollar reached these depths was when Donald Trump was elected president the first time in 2016.

"You draw your own conclusions, but I think that the reason for the recent trend down has been the disconnect between the Bank of Canada and The Fed, and that probably explains a lot more of it than it does the U.S. election," he said.

"Now, whatever comes next, with the new Trump administration, whether they target Canada, whether they impose tariffs, whether they disrupt the global supply chains, that, of course, can have an effect – but the recent trend is not really Trump-related."

- With files from Reuters- With files from Reuters