The Loonie Makes a Comeback

The Canadian dollar gained ground in 2017, posting its biggest gain since 2009 and likely boosting tourism dollars in the Flathead

By Molly Priddy

With only a border separating them, the Montana and Canadian economies have a symbiotic relationship, a dynamic set-up that reflects and shifts with the changes in currency value in both countries.

And while early January reports note that the U.S. dollar declined last month when measured against other major currencies, the Canadian dollar, often referred to as the loonie, had a considerable comeback in 2017.

The loonie was at a two-month high as of Jan. 5, climbing to a comparative worth of $0.81 in U.S. dollars. That means one U.S. dollar is worth $1.24 in Canadian currency.

Total, Canadian currency gained back 7.2 percent in value throughout last year year, its second straight year of gains as the Canadian economy reckoned with a drop in oil prices.

The loonie reached parity – meaning equality with the U.S. dollar – in 2010 and stayed relatively close to that level for the next few years, until September 2015 when the value dropped to a monthly average of $0.75 in U.S. dollars.

When the Canadian dollar is strong, sitting at 80 or 90 U.S. cents, Flathead Valley businesses tend to see a boost from their neighbors in the north.

“During my last trip to Kalispell, I was told repeatedly that Canadian tourism helped the Flathead region weather the great financial crisis of 2008 – a testament to the importance of our shared border,” said Jerome Pischella, Senior Trade Commissioner for the Consulate General of Canada in Denver, which represents the Government of Canada in Montana.

“A stronger Canadian dollar will undoubtedly boost tourism from Canada to Montana, as Canadians will find their trips to the United States more affordable. Some might even seek to purchase vacation property or make other investments into this area.”

At the Kalispell Costco, where they track purchases made by Canadian customers, sales are up, but Canadians now make up less of the overall customer base, according to warehouse manager Greg Gillingham.

In 2015, Canadians represented 10 percent of the customer base. Now, due to increased purchases from local and visiting American customers, they now hold about 7 percent.

And that’s even with sales to Canadian customers increasing 6.5 percent in 2017, Gillingham said, along with an increase of 12 percent in Christmas sales to Canadians.

“Our local sales have grown so much,” he said. “It’s better for us because it’s more stable.”

Directly to the north of Montana, the Canadian province of Alberta continues its economic comeback as crude oil prices traded above $62 last week. Alberta Finance Minister Joe Ceci told CBC News on Jan. 5 that the oil prices are a sure sign that Alberta’s economy is in full recovery.

Over the last two years, the Albertan economy shrank by more than 7 percent, and tens of thousands of people were laid off due to a precipitous drop in oil prices. However, the Conference Board of Canada – an independent not-for-profit research organization – is projecting a 6.7 percent gross domestic product increase.

The Albertan government predicted continued growth, hoping to achieve a balanced budget by 2023 after the province went into debt last year for the first time since 2000 due to falling tax revenues and the massive wildfires at Fort McMurray.

Pischella, the trade commissioner, said the increasing Canadian dollar increases consumer confidence across the border, but might have a tougher impact on American tourists heading north.

“Unfortunately, currency parity will mean that American tourists visiting Canada will reap less of a cost bargain,” Pischella said. “However, Montanans will always be welcomed with hospitality and smiles that hopefully will make up the value.”