Thursday, December 13, 2007

Dollar Effect?

Strong Dollar = Strong Cross-the-Border Sales? Well, Not So Much

StatsCan released a report today that suggests that the strong Loonie hasn't increased cross-the-border shopping:

Whether measured by the number of same-day auto trips across the US border or the average amount spent on these trips or online shopping, the recent increases in cross-border shopping have been minimal relative to retail sales, according to a study released today in the Canadian Economic Observer.

Cross-border shopping volumes in 2007 pale by comparison with the phenomenon observed two decades ago.

A relatively small rise in the exchange rate in the late 1980s and early 1990s provoked a huge increase in same-day auto trips to the United States. By comparison, since 2002 the largest appreciation of the exchange rate ever has been accompanied by a relatively small rise in same-day auto trips.

The close relationship between the exchange rate and same-day auto trips from 1986 to 2001 weakened substantially as border security tightened following the September 11, 2001 terrorist attacks and has not been re-established since.

I will say this: the idea of going to the U.S. to buy things that are quite often minimally higher in a Canadian store defies logic. The cost of gas and the aggravation of crossing the border is enough for me to pay a dollar more here.

--Czobit

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