The overinflated CAD has been a recurring feature of recent economic commentary, and makes a repeat performance in this month’s Peter Andersen Report. While many are naming it as the cause for Canada’s currently poor export performance (another repeat underperformer in this report), Bank of Canada Governor, Mark Carney, has been accusing Canadian businesses of using it as an excuse for poor export strategy. BDC seems to corroborate Mr. Carney’s point by suggesting the high dollar can only account for 20% of the poor performance.
There are things businesses can do to minimize the negative effects of soaring – or crashing – currencies on their sales and revenue. Hedging, for instance, is not just for personal investments; the same principles can apply to business operations. Setting up operations or bank accounts in countries you do business with can give you the ability to work in local currencies, removing the fluctuations altogether. Too, contracts that specify future exchange rates can help to protect you against major fluctuations.
You can find out more about some of these options here:
- Coping with a Strong Canadian Dollar
- Operational Hedging Curbs Exchange Rate Uncertainty
- The Costs of Currency Hedging
- The High Loonie’s Sustainability
And, of course, TEC members can find out about everything else that’s affecting the Canadian economy in their Peter Andersen Monthly Economic Report email.