Thu 25 May 2006
Many of us operate e-businesses, or at least have an e-business element to our company. It doesn't matter where you operate your business, if you do business in US funds, you should be ready to consider a new market.
Once, Canadian dollars were worth virtually the same as American dollars. However, for nearly 2 decades, Canada's dollar has been trading at about two-thirds of the American dollar. Essentially, that meant it was more expensive for Canadians to purchase products in American funds than in Canadian funds. So given the choice between two products, one in Canadian funds and one in American funds, they might be more likely to choose the product in Canadian dollars.
However, due to their robust economy, their dollar is once again catching up. Where it once traded at about 66 cents on an American dollar, it is now trading at about 91 cents on an American dollar (at the time of this writing). There is talk that it could achieve “parity” very soon and perhaps even outpace the American dollar slightly.
If you do business in American dollars, that's great news for you. While Canadians did buy products in American funds before, the transfer fees and exchange rate was sometimes enough for someone to pause and count the additional cost (and perhaps NOT make the purchase).
But now, with the dollars being almost the same, American products are priced virtually the same as Canadian products. That means Canadians may be more willing to buy products in American dollars. That means an additional 30 million people have suddenly increased their likelihood of shopping online for products in American funds.