Arabnews24.ca:Wednesday 28 September 2022 01:10 PM: It may only be a difference of a few cents, but when the gap between the Canadian and U.S. dollar grows, people in Windsor-Essex in southwestern Ontario are among those feeling the change. And right now, that gap is getting bigger.
The loonie recently hit a two-year low relative to the U.S. dollar, which is performing strongly compared with many other currencies.
At midday Wednesday, the Canadian dollar traded for 73.04 cents US compared with 72.85 cents US on Tuesday. At the beginning of September, the loonie was worth around 76 cents US.
Effective this Saturday, Canada is dropping its COVID-19 measures (including proof of vaccination), something that'll likely lead to more border traffic.
In a region with strong economic and social ties with Michigan, the dollar's recent tumble is playing out in different ways.
For those crossing into the U.S. in search of bargains on gas and groceries amid inflation on both sides of the border, it means their dollars won't go quite as far.
People going to Detroit for a sports game, a night out, or to visit family and friends will have to pad their budgets a bit as well.
"It's not a big margin … but does make it a little bit more expensive compared to, say, one month ago," said Gurupdesh Pandher, a professor of finance at the University of Windsor.
Shoppers and tourists aren't the only ones affected by the changing tides of the dollar.
The weaker Canadian dollar could actually help a major local employer, the manufacturing industry, according to Justin Falconer, chief executive officer of the employment and community development group Workforce Windsor/Essex.
"A lot of our products and services are exported to other countries, all using [the] American dollar as sort of the gold standard, and so there can be tremendous opportunity for Windsor-Essex companies who are exporting goods to take advantage of this low Canadian dollar because all of a sudden, our products become two or three per cent more competitive on every quote, on every every line," he said.
"So, especially for existing contract holders who are paid in American dollars and it's all been pre-negotiated, they're now getting sort of a better margin as a result."
The perks of being paid in U.S. dollars
For people living in Windsor-Essex and working in Michigan, they're also getting a bit of a boost when they convert their earnings back to Canadian money.
"People who receive American paycheques and live and operate primarily in Canada are going to be big winners as the Canadian dollar continues to tumble against the American standard," said Falconer.
Right now, there's not a clear picture of how many people are getting this perk. The most recent estimate of the cross-border commuter population is from the 2016 census. At that time, 6,695 people had drawn income from outside the country, about 80 per cent of which Workforce WindsorEssex estimates are cross-border commuters.
Labour market crunch
Some professionals, like health-care workers, can easily work across the border due to a special visa that was negotiated under the two countries' free trade agreement.
If the Canadian dollar stays low relative to the U.S. dollar, it could make the option more attractive, Falconer said.
"In many ways, it can make our labour market tighter here," Falconer said. "We already have a declining labour force In terms of raw numbers. There are less and less people available to work than [have] historically been available in the past."
Meanwhile, some in Detroit are also feeling the impact of the lower Canadian dollar.
Mexicantown Restaurant, located near the Ambassador Bridge, accepts Canadian currency at par twice a week (on Mondays and Fridays at the bar only).
General manager Bob DiMattia said the dollar is a factor outside the restaurant's control, so he tries not to worry about it.
The promotion has weathered much sharper plunges in the Canadian dollar. Despite the incremental increase in costs — which comes amid other challenges like rising food costs — they have no plans of scrapping it.
"We're just excited to see more Canadians coming across the border. It's been really nice to see a lot of the Canadians coming back and seeing old faces again, and friendly familiar faces. It's great."