It’s baaaack….the Canadian dollar that is.
The Canadian dollar is trading above $0.93US this week, its highest point since 1977, and the rise is likely to continue. With commodity rich Canada continuing to feed the energy and raw materials needs of the world, a strong Canadian economy, and continued fiscal surplus, many analysts have the Canadian dollar going even higher. Some are even using the word parity! The loonie hasn’t been at par with the US dollar since 1976.
While the strong Canadian dollar may do wonders for Canadian egos it doesn’t necessarily help Canadian exporters, especially those companies with big chucks of revenue coming from the US and Europe. From an equity market perspective, Canadian IR professionals can expect numerous calls from analysts and shareholders asking how their company plans on handling the lofty Canadian dollar and the subsequent crunch on earnings. Going into the next earnings season, foreign exchange will be a hot topic.
Does your company employ a hedging strategy? If not, what is your company’s answer to handling the dramatic increase in the value of the loonie?