How unfavorable? The Canadian dollar has traded value fluctuated around $0.69 to $0.70 since the beginning of the year, something that has never been seen since Covid Pandemic in early 2020. About $0.74.
Most obviously, this puts Canadian consumers at a disadvantage when shopping across borders, making online purchases from retailers and independent sellers in the United States, or traveling to countries where the U.S. or the U.S. dollar is widely accepted. While many Canadians are shifting gears to avoid driving south and/or focus more on buying Canadian-made goods, some fees are still not avoided altogether.
For these situations, holding USD can provide more predictability to the budget and reduce the impact of volatility or further decline in Canadian dollars, especially large transactions. For example, if you have a large number of holidays or purchase prices at a USD price, buy currency in advance at a rate you think is acceptable, which can make your travel expenses more predictable and make the impact of the currency drop directly on the travel or expenses time. One way to save dollars is through an account such as the EQ Bank Us Dollar account, which offers compelling interest rates, the highest rate for savings in Canada in the United States.
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EQ Bank USD Account
- interest rate: Earn 3% on your U.S. dollar savings. Read the full details on the EQ Bank website.
- Minimum balance: N/A.
- cost: N/A.
- Eligible for CDIC coverage: Yes
The EQ Bank U.S. dollar account also offers one of the best exchange rates in Canada. By combining these features without monthly fees, EQ Bank Dollar account provides Canadians with a clever way to maintain and increase their savings while preparing for U.S. spending, including travel, cross-border Shopping and investing. But first, let’s see how the Canadian dollar fell so violently in the first place.
Why is the Canadian dollar so weak?
Loonie’s struggle is for several reasons – depreciation of currency is by no means the result of a factor. Conditions that cause losses to the dollar include uncertainty in the federal government, large federal budget deficits ($61.9 billion in 2023-24), uncertainty over potential tariffs by the Trump administration, stronger dollar, and interest rates between rates Different Canadian banks and their U.S. counterparts, the Federal Reserve.
This is a lot of stuff. But wise monetary decisions should not be driven primarily by emotions.
While all of these factors may paint a faint view, it is important to remember that huge currency fluctuations in Canada and around the world are common as long as currency exists. Don’t panic! Instead, look for products designed to help you buy and hold USD, such as the EQ Bank Us Dollar account, which can reduce the impact of sudden fluctuations during economic turmoil.
How to protect your U.S. savings in Canada
Think you don’t have U.S. savings protected by Canadian Deposit Insurance Corporation (CDIC)? With an EQ Bank Dollar Account, your balance is eligible for CDIC protection (up to $100,000 per insured person).
What does a weaker Loonie mean for Canadians?
As mentioned above, Loonie’s reduced value means that Canadians have much less purchasing power to travel to the United States, or when buying in US dollars. For example, if Loonie sells for $0.69, a kitchen utensil with a price tag of $189 would cost almost $273. The greater the purchase price, the greater the impact. So if you are expecting to buy a large item, buying the same dollar purchase as that fee at a rate you think is acceptable can help your future budget.
