The Effect of U.S. Currency Rate on the Canadian Economy

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The falling Canadian currency and a stable US currency has had an immeasurable impact over several business sectors domestically. As the value of the Canadian dollar is at its lowest value in over 12 years and the American dollar has increased in value throughout the past four years, not many Canadians are aware of how far-reaching an impact the low Canadian dollar has had. This is nowhere more evident than in packaging. The effect of the US currency rate’s impact on importing American manufactured goods into Canada has created a situation where many industrial and agriculture packing machinery businesses have struggled to adapt.

Many industrial and agriculture packing businesses and commodity businesses use manufacturing facilities based out of the United States. They are therefore subject to any change in US currency rate. When the Canadian dollar deflates as it has, it creates a situation where consumers are often charged extra fees and/or see price hikes. While multi-national corporations can handle these types of changes in US currency rates, small-to-medium sized business are hit even harder. With industrial and agriculture packing businesses having to pay more according to the US currency rate, these commodity businesses do not dig into their profits to cover the cost and instead defers this cost to customers. The passing along of cost to the customer only serves to create a situation where customer resources are stressed and consumers can no longer trust these same companies to deliver at the price advertised.

If the US currency rate continues to stabilize while the Canadian dollar continues to fall, this could companies having to increase their prices yet again. Some businesses have even held off on raising prices for now, either hoping that the US currency rate will improve or planning to roll-out price increases in the next year.

Passing on these costs to customers is the harsh reality. Businesses are having to pay more than they have in the past decade and a half for imports thanks to the US currency rate, and customers are being hit hard. The consumers that want to buy from Canadian based businesses in commodities for the industrial and agricultural sector need to know that the prices advertised are not going to change and that there will be no extra fees.

How a business adapts to the US currency rate is by planning ahead. Any industrial packaging machinery or commodity business in the industrial and agricultural markets must plan ahead in order to keep prices in check and to ensure that consumers are not going to be hit with a higher-than-expected price. As a customer that is purchasing industrial or agriculture equipment in Canada, sometimes a customer isn’t aware that this equipment is manufactured in the US and is subject to the US currency rate. If a customer chooses a business that is not planning ahead, they could be hit with a huge fee that they didn’t expect in this case. Clute Packaging Systems Ltd. has planned ahead however and does their best to protect their customers from changes in the US currency rate. Industrial and agriculture markets are getting what they paid for at the price advertised with Clute Packaging Systems Ltd.