What the Canadian dollar means for university students

If you’ve noticed your grocery bill creeping upwards lately, you’re not imagining things. 

This year, the Canadian dollar has depreciated by nearly 20 per cent, the lowest it’s been since Finding Nemo was still in theatres and Beyoncé’s “Crazy in Love” topped the charts. 

Interpreting the foreign exchange market’s fluctuations may seem like a baffling skill only mastered by analysts and finance enthusiasts. But fear not! The logic behind the loonie’s recent slump is quite simple. 

As a resource-based economy, the value of the Canadian dollar is directly related to the price of oil. In the past few years, global oil prices have plummeted, falling from $105 a barrel in 2014 to now below $35. 

The effect of tumbling oil prices on our weakened dollar is pulled straight from a first-year economics lecture: the law of supply and demand. Oil giants such as Saudi Arabia and Iran continue to pump out petroleum despite dwindling world demand, thus creating excess supply and driving the market price of oil downwards. Consequently, the loonie has taken a considerable hit. 

Currently, one Canadian dollar is trading at 0.75 US dollars, a far cry from parity. 

What does this mean for Canadian consumers? Well, the loonie effectively buys us less foreign goods and services than before. This poses a serious problem, as most of Canada’s consumption goods are imported, such as cars, toys, clothing — you name it, we import it. Retailers are raising their prices to cover their growing costs, and rightly so. 

More alarming are the climbing grocery prices. Since most of Canada’s fresh produce is also imported, a simple grocery trip to Metro can set students back considerably. Now may be an opportune moment to shop local and support Canadian farmers. Whether that means visiting the on-campus farmer’s market on Wednesdays or trekking to Springer Market Square for the Kingston Public Market, buying locally grown produce can save you dozens and even hundreds of dollars. 

The weak Canadian dollar also makes traveling abroad a greater luxury. Instead of paying 25 per cent more on an American vacation or on your yearly shopping trip across the border, consider planning a staycation in Canada and become a tourist in your own country! After all, with its vibrant pockets of culture, sweeping landscapes and diversity, Canada has underrated appeal. Its weak loonie is likely to attract a growing number of foreign tourists, so why not join them by visiting breathtaking Banff or the historic buildings of Old Montréal? 

Along with incoming tourists, keep an eye out for Toronto, Vancouver and Montréal serving as the backdrops of big-budget movies and TV shows. Many American productions, including Suits, Interstellar and X-Men: Apocalypse, are opting to shoot in Canada to reap the savings. 

It’s difficult to predict the destiny of the Canadian dollar, but some analysts have indicated that the downward trend shows no signs of stopping. My advice? Spend smart, spend local and get your star-spotting sunglasses out.