Canadian Dollar Rises Above US Dollar – What Does This Mean For Barbados?

us-dollar-canada-barbados.jpg

The Canadian dollar rose above the US dollar for the second day in a row. What does this mean for Barbados?

A friend wrote us…

“What this means for us is, that as the value of the US dollar sinks, so too does our currency, which then pushes up the cost of our imports. So that our prices will continue to climb.”

That’s true, but might it be better for our business dealings with Canadians and Europeans? At least perhaps for our tourist sector?

As Pull! Push! says… I ain’t no econamister!

What do you think, folks?

45 Comments

Filed under Barbados, Business, Business & Banking

45 responses to “Canadian Dollar Rises Above US Dollar – What Does This Mean For Barbados?

  1. Hants

    It means the Barbados Tourism Authority should start a massive advertising campaign in Toronto, Ottawa and Montreal and also ask Air Canada to increase flights if necessary.

    In 2002 the Canadian dollar was worth 60cents US.
    so Canadians were travelling to cheaper destinations.

    Now Barbados is not “expensive”.

    Wake up BTA and rake in some Canadian Cash.

  2. Bajan-Canadian

    It has become a trend for Caribbean people who can afford it to send their kids to University and College in Canada, rather than the UK, as had been the choice in the past. I think Canada became popular because of the previously favourable exchange rate. This could change things around again.

  3. ninemikemike

    The first thing it means is that currency markets are a joke. The second thing is that the tourism product becomes more attractive to the target markets, with the exception of the US, and thirdly our imports from Canada and Europe will get dearer. We have been here before, no big ting!

  4. Lady Anon

    Ever notice that on the backs of products, esp. books, the Canadian price is higher than the US price? In June, when the Cda US exchange rate was about 97 cents there was a little furor about the price being charged. I wonder what it is like now?

  5. Anonymous

    Award of the Arbitral Tribunal – Sept. 17, 2007
    Guyana/Suriname.

    PDF copy.

    Click to access Guyana-Suriname%20Award.pdf

  6. Paddy O'Furniture

    If most imports to Barbados are from the US and paid for in US dollars then the increased Canadian dollar does not affect the costs. So long as Barbados dollar is pegged to US dollar there is no increase/decrease for payments or receipts in US dollars.

    The current strong Canadian currency increases the value of foreign exchange earned from Canada and increases costs of items imported directly or indirectly from Canada.

    Barbados has quite a few resident Canadian expats some of whom live on Canadian pensions. They and the Barbados economy benefit from a strong Canadian dollar since the Canadian expats and tourists will have more Barbados money to spend locally. And the banks can trade their Canadian currency for US dollars while it lasts.

    (Hint to Tourism sector more advertising in Canada)

    On the other side, BS&T imports a lot of food products from George Weston/Loblaws – a large Canadian corporation. If the goods are paid for in US dollars – there would be no immediate impact in Barbados. However cost of these imports may increase in future as new stock is shipped from Canada and increased costs passed on.

    The upside is immediate increase in value of foreign exchange from Canada.

    The downside is possible increase in cost of imports over time.

  7. Straight talk

    ‘Allo ‘Allo, I shall say this only once, (again).

    The parity of the Canadian and US dollars, is I agree, on its own no big thing.

    It may be merely a milestone on a catastrophic decline of our own pegged currency.

    Saudi has just moved from the dollar peg, Kuwait sells its oil in petroeuros, China and Russia are considering a similar course, the Iranians are establishing their own Middle East Oil Bourse.

    It nay even commence trading before Bush bombs them, and by that further act of aggression devalue his dollar and our currency even more.

    Once , if it ever happens, Middle East oil is not traded for worthless American paper we will really be in a tricky position.

    The whole new world economy is waking up to the bankrupt imperialist policies of the Bush administration, and it is realising the Emperor has no clothes.

  8. reality check

    George Bush has manged in 7 years to snatch defeat from the jaws of victory.

    Clinton had 7 years of surpluses and was starting to pay the incredible debt ( Regans gift to America ) back each year making the US Dollar the most sought after safe currency in the world.

    The Europeans and Canadians have done nothing special to keep their currencies high other than spend less money than they take in each year and pay down their debt. In short they have their economic houses in order.

    George Bush like Owen Arthur and apparently like your PDC party think you can spend the public monies and give tax breaks with no day of reckoning.

    You can’t spend a half trillion dollars a year more than you take in without something having to give.

    Americans have been taking the medicine by way of reduced currency value for the past 6 years or more and only those that went out of the country knew full well what was happening.

    Similarly, Owen has been driving up debt on many different projects with such incredible incompetence and brazen “tiefing” that George Bush has been made to look like an economic genius.

    Get ready Barbados, it is not going to be pretty.

  9. Kathy

    The US dollar may have fallen, but US government policies are not bankrupt. The stock market here in the US is doing fine – the Dow is higher than it has ever been before. The Bush tax breaks have spurred spending and development, and reduced unemployment. The net taxes received by the US government are much higher now after the tax cuts than they were before the tax cuts.

    America continues to donate more money to fight AIDS and poverty in Africa than any other nation in the world – I bet it is more than the rest of the world combined. America’s generosity makes her poorer in dollars but money isn’t everything.

    When the continuous flood of immigrants into America stops, or turns the other way, I will believe that America is in trouble.

  10. YUM YUM I like it!

    Kathy

    Hip hip hooray for America!

    Isn’t Uncle Sam great.

    (I hear that ‘sarcasm is anger’s ugly cousin’)

    USA has generously donated a civil war to the Iraqis, along with years of ethnic infighting and instability and thousands of civilian deaths!

    Yipee! Yipee! Yipee!

  11. Lady Anon … believe me, the book prices in Canadian dollars are a real sore point of Canadians. I’ve advised the big Canadian book chain that I will not be buying books from them until they get their publishers (who set the prices) to get the Canadian price in line! This will not be an easy threat to keep however since I usually buy a lot of books (maybe I’ll have to go to the library).
    Barbados will be much more affordable for Canadians now – the suggestion of stepping up with the marketing is a good one!

    BTW … keep up the good work with the blog – I love following Barbados politics. I do however worry about the safety of the BFP crew …. be careful & stay safe! That would be one story I would not like hearing about and it does seem that your government would LOVE to speak to you all in person.

  12. theNickster

    It means that this administration could learn a thing or two, protect its natural beauty and efficiently utilize its resources (granted canada is having pollution problems in some areas). Imagine convincing the public of the importance of not having the dollar devalued and tie ours to one that’s sinking. Dollar value is still relative, the barbadian dollar is worth a lot everywhere, but here.

  13. Straight talk

    Kathy:

    Everything in the US may seem rosy to everyone in the US, but not to the financial world outside.

    They have judged Bush’s economic performance of the last five years and have accordingly devalued your, (and the Bajan), dollar by over one third.

    I sincerely hope that wiser heads will soon prevail in Washington.

  14. anon

    our currency has been devalued as a result of being linked to the US$. We now need to try and boost our foreign exchange earnings

  15. J. Payne

    Barbados should Peg to the Euro instead or else gold….

  16. J. Payne

    But, But, But, Bush said his policy was for a “strong US dollar…”

    LOL…

    I tell ya, ANYTHING– that man touches (yeah you know the rest)…
    —–

    Bush’s ‘strong dollar policy’ comments fall on deaf ears
    By Sue Kirchhoff, USA TODAY
    Posted 12/15/2004 10:14 PM

    http://www.usatoday.com/money/economy/trade/2004-12-15-dollar-bush_x.htm

    WASHINGTON — President Bush said Wednesday that the White House will shore up the sliding dollar by working to cut record budget and trade deficits and overhaul Social Security. But his words fell flat on currency markets as a new Treasury report showed the United States is having trouble financing its current huge debt.

    “The policy of my government is a strong dollar policy,” Bush said during a meeting with Italian Prime Minister Silvio Berlusconi, who is worried that the fall of the dollar against the euro has made European exports more expensive. The dollar has weakened about 13% against the euro since spring.[ . . . ]

  17. Jeppa

    our currency has been devalued as a result of being linked to the US$

    Very true! Some banks paying $2.04 for the US dollar now.

    Lukka what happening hey doa

  18. Hants

    Opportunity now for Barbadians to export to Canada.

    The BAS and the BIDC should actively assist exporters in getting into the Canadian market.

    Since it is likely that there will be a downturn in American visitors, maybe Canadians will fill the void if the BTA acts quickly.

  19. RoyBoy

    Floating currencies change value all the time. Euro/US$; pound/$$; $$/Yen etc. etc. traders actually make fortunes trading these currencies. Nothing new!

    The impact is directly related to the volume of trade that we conduct with Canada. Don’t have any stats but I would assume this to be in favour of Canada, so yes Barbados will see price/cost increases on certain goods/service over time once this value of the currency persist.
    However, don’t forget the farm workers program; these guys will be better off.

  20. Hants

    Breaking news BFP.

    Clico offering $3 per share for Barbados Farms LTD.

    Cow had offered $2.75

  21. D.Jones.

    “The stock market here in the US is doing fine – the Dow is higher than it has ever been before.”

    The stock market is cruising for a bruising!

  22. D.Jones.

    “Dollar value is still relative,
    the barbadian dollar is worth a lot everywhere, but here.

    Nuff said!
    ———————-

    sure hope we don’t get the same October Surprise that Dow Jones Industrial Average gets!

    Dow at 13,900? Based on what?

    Time to take profits and RUN!
    beware the Ides of October.

  23. Green Monkey

    U.S. Banks Brace for Storm Surge as Dollar and Credit System Reel

    by Mike Whitney

    Global Research, September 19, 2007

    By now, you’ve probably seen the photos of the angry customers queued up outside of Northern Rock Bank waiting to withdraw their money. This is the first big run on a British bank in over a century. It’s lost an eighth of its deposits in three days. The pictures are headline news in the U.K. but have been stuck on the back pages of U.S. newspapers. The reason for this is obvious. The same Force 5 economic-hurricane that just touched ground in Great Britain is headed for America and gaining strength on the way.

    On Monday night, desperately trying to stave off a wider panic, the British government issued an emergency pledge to Northern Rock savers that their money was safe. The government is trying to find a buyer for Northern Rock.

    This is what a good old fashioned bank run looks like. And, as in 1929, the bank owners and the government are frantically trying to calm down their customers by reassuring them that their money is safe. But human nature being what it is, people are not so easily pacified when they think their savings are at risk. The bottom line is this: The people want their money, not excuses.

    But Northern Rock doesn’t have their money and, surprisingly, it is not because the bank was dabbling in risky subprime loans. Rather, NR had unwisely adopted the model of “borrowing short to go long” in financing their mortgages just like many of the major banks in the U.S. In other words, they depended on wholesale financing of their mortgages from eager investors in the market, instead of the traditional method of maintaining sufficient capital to back up the loans on their books.

    It seemed like a nifty idea at the time and most of the big banks in the US were doing the same thing. It was a great way to avoid bothersome reserve requirements and the loan origination fees were profitable as well. Northern Rock’s business soared. Now they carry a mortgage book totaling $200 billion dollars.

    $200 billion! So why can’t they pay out a paltry $4 or $5 billion to their customers without a government bailout?

    It’s because they don’t have the reserves and because the bank’s business model is hopelessly flawed and no longer viable. Their assets are illiquid and (presumably) “marked to model”, which means they have no discernible market value. They might as well have been “marked to fantasy”,it amounts to the same thing. Investors don’t want them. So Northern Rock is stuck with a $200 billion albatross that’s dragging them under.

    A more powerful tsunami is about to descend on the United States where many of the banks have been engaged in the same practices and are using the same business model as Northern Rock. Investors are no longer buying CDOs, MBSs, or anything else related to real estate. No one wants them, whether they’re subprime or not. That means that US banks will soon undergo the same type of economic gale that is battering the U.K right now. The only difference is that the U.S. economy is already listing from the downturn in housing and an increasingly jittery stock market.

    That’s why Treasury Secretary Henry Paulson rushed off to England yesterday to see if he could figure out a way to keep the contagion from spreading.

    Good luck, Hank.

    C0ntinued at:
    http://www.globalresearch.ca/index.php?context=viewArticle&code=WHI20070919&articleId=6816

    For interesting background information on the origins and development of the fractional/debt based monetary systems in wide use today and the inherent flaws in this model (principle one being that it will be unsustainable in the long term) along with some proposed alternatives watch the video “Money as Debt” on google video.

    Here is the link:
    http://video.google.com/videoplay?docid=-9050474362583451279

    Paul Grignon’s Money As Debt DVD is probably the best tool for promoting money reform yet to be produced.
    …. At 47 minutes, it is long enough to get over the salient facts, without being too long, and it involves watching amusing animated graphics rather than listening to a talking head. Best of all, it has a nice gentle Canadian voice-over. Everyone trusts the Canadians. They are both serious-minded and well-intentioned.

    Anne Belsey, Leader Money Reform Party, UK

    http://www.moneyasdebt.net (click on reviews)

  24. Kathy

    I was merely commenting on the apparently strong economy in America and the tax breaks that have stimulated it. I also believe that if America is pulled down, poorer countries that America is helping to survive will suffer. I WANT America to prosper, not only because I live here, but also because America is generous. If America withdrew some or all of its foreign aid, the dollar might rise, but several countries would be decimated.

    But don’t get me wrong, I am very happy that Canada is prospering, and I want Barbados to prosper also. I will always love my native land.

  25. Backra Johnny

    Get ready for the new world order …

    Russia, China and India .. the new world superpowers

    Ya tink Mia stupid !!!!

  26. anon

    What do people think barbados farms is worth?

  27. Anonymous

    After pointing readers to a copy of the Guyana/suriname Arbitral Tribunal award in PDF format, I must now ask readers to be careful with PDF files.
    Sorry I only read this a few minutes ago.

    http://mashable.com/2007/09/21/adobe-vulnerability/

  28. reality check

    Green Monkey

    thanks for adding an extra dimension to the discussion

    Somehow I can’t help but think, similar to the 1929 great Wall Street crash where people could obtain 100% credit that similarily giving people 100% mortgages who have no financial reserves of their own to sustain a downturn is tantamount to creating a train wreck. The only question is when will the train wreck ocurr and who will suffer the consequencess.

    The traditional reserve of the owner having 25% equity was permitted to evaporate. Instead of making the developers ensure that these interest rate loans were guaranteed for 20-25 years for the extra risk, the developers did not have to discount or adequately discount these loans to the Banks. Why were the Banks allowed to take on the extra risk that normally a borrower or developer had to meet?

    Instead these Banks recklessley and almost fraudlently took on these loans with their clients monies as debt instruments with no substantial discount or reserves to count for the higher risk and inevitable downturns in any economy.

    Where were the regulators to ensure that first time buyers didn’t get stung with rate increases when the mortgage term matured? Where were the regulators who should have insisted that these debt instruments be immediately discounted
    from the developers to reflect the extra risk?

    The answer is, everyone was making too much money in terms of fees to care about the risk. Now that the chickens have come home to roost, it will be interesting to see who will have to absorb the inevitable losses?

    While timing and reserves may be an additional issue with Northern Rock Bank, lending against security interests that are collateralized by 100% mortgages has to be the main and inevitable trigger for Banks and investors now stepping back and not wanting to put on any value on them.

    If Goverments wish to assist these Banks and lenders they should backstop or guarantee the mortgages to the traditional 75% of appraissed value and let the Banks and lending institutions absorb their losses.

    This would create immediate liquidity in these debt instruments at hopefully little or no loss to the citizens who pay the bills.

  29. The present increase in the Canadian Dollar value re the value of the US Dollar will NOT have any adverse impact on the trading, investment, and financial relationships between Barbados and Canada. Based on a floating exchange rate mechanism, the value of the Canadian currency will increase or decrease in value against the US currency, in the short or long term, as has happened before.

    That Barbados has NEVER had or does NOT have any substantial trading, investment, and financial relationships with Canada, will mean that there will be little negative impact in those terms, either in the short or long term, and, too, in spite of the fact that the Barbados Dollar remains unwisely pegged to US Dollar.

    That there is hardly any mention by many Barbadians about the fact that the Canadian Dollar is at the same time rising in relationship to the Barbados Dollar, as it is rising against the US Dollar, means that other than in financial circles this parity (the Barbados Dollar vs the Canadian Dollar) means very little to Barbadian exporters of Barbadian goods and services to Canada, or to Barbadian importers of Canadian goods and services into Barbados, given the universal historical demand for the US Dollar. Moreover, the US Dollar is still the major denominating currency in trade, investment and financial relationships between Barbados and Canada.

    Nevertheless, we in the People’s Democratic Congress will continue to state and restate that when we become at the helm of government of this country that we will move swiftly to Abolish ALL Exchange Rates parities with the Barbados Dollar, so as to give greater autonomy, stability, protection and strength to the conduct of money, business and social activities in Barbados, and in the context of an increasingly intense and volatile global social, political, financial and economic environment.

  30. Worth saying again.

    “The whole new world economy is waking up
    to the bankrupt imperialist policies of the Bush Administration,
    and it is realising the Emperor has no clothes!”

  31. And again I say...

    Beware the Ides of October!

    October is a very funny month, financially.
    Hilarious, evennnnnn…

  32. 2007

    I glad Leroy Parris and Clico come with a counter offer to greedy Williams boys plans to own Bdos Farms. Nice job Leroy. Best move youve made. Its refreshing to see a black face talking about big money transactions with the dollars to back up the talk.

  33. Kreshtunz

    Yeah all very well and good, 2007,
    but Leroy Parris and CLICO
    – is the hated TRINIDAD!

    Will be belong to Trinidad?
    instead of to USA?
    or to CHINA?

    WHO will own us, lock stock and barrel, right down to the Central Bank and it’s contents(if any!) in another 25 years or so?

    As it is, we are managed by the I.M.F.

  34. John

    anon
    September 22nd, 2007 at 2:53 am
    What do people think barbados farms is worth?
    ++++++++++++++++++++++++++++

    How many acres does it own?

    Take the number of acres, convert to square feet and multiply by $10.00!!

  35. John

    2007
    September 22nd, 2007 at 12:53 pm
    I glad Leroy Parris and Clico come with a counter offer to greedy Williams boys plans to own Bdos Farms. Nice job Leroy. Best move youve made. Its refreshing to see a black face talking about big money transactions with the dollars to back up the talk.
    +++++++++++++++++++++++++++++++++

    Understand Mr. Babb was similarly pleased.

    Wonder if the bit about a vision for Barbados agriculture is true!!

  36. Green Monkey

    Where were the regulators to ensure that first time buyers didn’t get stung with rate increases when the mortgage term matured? Where were the regulators who should have insisted that these debt instruments be immediately discounted
    from the developers to reflect the extra risk?

    The answer is, everyone was making too much money in terms of fees to care about the risk. Now that the chickens have come home to roost, it will be interesting to see who will have to absorb the inevitable losses?

    Where were the regulators? Well, as I understand it, according to the current conservative/Republican philosophy we don’t need them because business can be “self regulating.” Regulators and regulations do nothing but slow down the economy and unnecessarily get in the way of increased corporate profits.

  37. 2007

    Kreshtunz you not all wrong. We caught between a rock and a hard place the hated Trinidadians and hated Williams.

  38. Wishing in Vain

    To John based on the purchase price of estate lands that COW recently sold to someone then the real value of Barbados Farms is nearly 2. 1/2 times the price that COW has offered for it.
    So the new offer by Clico is a very sensible and healthy thing for the shareholders of Barbados Farms, the first offer by COW was merely to test the waters and hopefully getaway with a steal of a bargain.
    I have no problem with CLICO making a go of it at least this way the shareholders will have more options available to them and can make an educated decision based on these developments.

  39. Luc

    It is actually in the interest of the USA to allow their currency to devalue and to allow some inflation to take place. They know, it reduces the real value of their (USD denominated) debts. The US of A is about to experience a deep economic plunge, perhaps even a deflationary depression and unless Barbados can attract income from other territories it will suffer terribly, for many years. Barbados is, in some ways lucky to be so small; but it must move quickly. Make full use of alternatives to fosil fuels, and strengthen trade with Brazil, Russia, European Union (remember there are bits of the EU just 40mins away, right in the Caribbean), China, Canada. But they will want authenticity and quality, not a superficial copy-cat product. Hold tight, even Bernanke can’t stop a Tsunami… but maybe those who are ready can surf it.

  40. John

    ….. $2.75, upped to $3.00 …. the ratio is not 2.5.

    Somebody still has their math wrong, …. not only COW.

  41. WotAcrock!

    “when we/PDC become at the helm of government of this country
    we will move swiftly to Abolish ALL Exchange Rates parities with the Barbados Dollar,
    so as to give greater autonomy, stability, protection and strength to the conduct of money, business and social activities in Barbados”

    Sounds like you guys intend to let the value of the Barbados Dollar ‘float’.
    Or sink. i.e. let it find its own REAL de facto value-level
    based on supply and demand,
    out there in the Big Wide World of Forex.

    I can see it now, listed right up there with the world’s major currencies.

    Yup.. it’ll be a ‘floater’, alright!! 🙂

  42. Kevin

    Option 1 – Williams group buys controlling interest in BFL, other Barbadians retain minority ownership and benefit from increases in value brought by running most as profitable farms (a skill exhibited by Williams) and developing other lots.

    Option 2 – CLICO buys all outstanding shares and turns most of Barbados into St. Phillip and jumps ahead of Barbados Government in terms of land ownership.

    Might be nice to see a black man involved in this, but don’t let that fool you. The trinis are more evil and care much less for this land than does COW.

  43. Hants

    Barbados Big shots spending like crazy.

    Simpson Oil Limited (SOL) is close to finalising a deal with Esso to acquire its Caribbean assets, beating French company Total SA.
    The Barbados-based heavy roller in the regional automobile market, already owns the Eastern Caribbean operations of Shell, which it acquired in 2004.

    Nouveau Riche: Cow, Clico, Sol.

  44. maple leaf

    to Kevin>
    Barbados is awash with qualified blacks not seeking handouts(Bizzy?)
    When COW places qualified blacks on his numerous boards and puts them into decision making positions in his mega bucks businesses give me a shout. You do know Barbados is ninety five percent black.
    Neither you nor COW fooling us these days.

  45. Yum Yum I like it

    I hate the way ‘the Trinis’ are being vilified!

    It serves some parties well to group these business people together, when all they have in common is their geographical origin.

    Trinidadian individuals and companies are investing in Barbados because this society is more stable than theirs both politically AND economically. This investment has been happening for YEARS.

    Business is business. Using emotive words such as ‘evil’ or ‘uncaring’ is not useful to business discussion. Businesses operate principally to make money for the individuals who have invested in them, whilst also sticking to the laws of the regions in which they operate.

    Don’t blame ‘the Trinis’, they are only spreading their investments to reduce risk.

    Any wise man/woman would!