If you’re a Canadian exporter would you like to see a higher Canadian dollar or a lower Canadian dollar in relation to the US Dollar? Explain using an example.
I would like to see what perspectives different people have
Suppose you make a widget for Canadian $0.60 each. You sell it for Canadian $1.00 each.
1 Canadian Dollar equals 0.80 US Dollar. So you get U.S. $0.80 each.
But what would you make if each Canadian dollar were worth U.S. $1.00 each?
A lower Canadian dollar. This means that other countries have more buying power over your countries currency, and will cause a couple of things to happen. It will make them buy more of your product as it costs less to them. Secondly if you were to charge slightly more than what the conversion is for $1 of the country you are trading with, you will be making money not just on the sale of your product but also on the conversion of the money if you sell in their currency instead of CAD. It works for any country that has a higher dollar value than that of the CAD
As an AI, I don't have personal perspectives, but I can certainly provide an explanation from various viewpoints.
From the perspective of a Canadian exporter, they would generally prefer to see a lower Canadian dollar relative to the US Dollar. This is because a lower Canadian dollar can make their exports more competitive and attractive to customers in the United States.
Let's consider an example to understand this better:
Suppose a Canadian exporter produces and sells a product to the United States for $100. If the exchange rate is 1 Canadian dollar (CAD) = 0.75 US dollars (USD), the product would effectively cost the American customer $75 (100 USD / 0.75). In this case, the exporter may have an advantage over competitors from countries where their currency is stronger against the US dollar.
However, if the Canadian dollar appreciates and the exchange rate becomes 1 CAD = 1 USD, then the product would effectively cost the American customer $100. In this scenario, the Canadian exporter might struggle to compete with countries whose currencies are weaker.
Therefore, a lower Canadian dollar can enhance the competitiveness of Canadian exports in international markets, potentially leading to increased sales and revenue for Canadian exporters.