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BMO Financial Group

November 24, 2011 12:25 ET

BMO Economics: Weaker Dollar Won't Stop Cross-Border Shopping

TORONTO, ONTARIO--(Marketwire - Nov. 24, 2011) - Even with the recent drop in the Canadian dollar, strong levels of cross-border shopping by Canadians are still expected this holiday season, according to BMO Economics. The loonie was last above parity on October 31, and is now hovering near US$0.95.

"The currency tends to lead visits to the US by a month or so," said Douglas Porter, Deputy Chief Economist, BMO Capital Markets. "Even at 95 cents, the currency is well above its purchasing power parity value - which is in the low 80-cent range - and will still prompt a lot of cross-border trips by Canadians in the next month. BMO forecasts that Canadian holiday retail sales receipts, excluding auto and gasoline sales, should increase between 2 and 3 per cent year-over-year in November/December."

According to a survey from BMO Bank of Montreal, 18 per cent of Canadians plan to shop in the United States this holiday season, up five per cent from last year (13 per cent). BMO's Holiday Spending Survey also found that Canadians are planning to spend almost $1,397 each this year on holiday shopping, travel and entertaining.

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