Canadian Businesses Cashing in on Lower Loonie: EDC Report

OTTAWA, ON--(Marketwired - December 11, 2014) - Canadian companies that sell abroad are getting an early Christmas present in the form of a lower Canadian dollar, according to a semi-annual report by Export Development Canada (EDC).

EDC is Canada's trade bank, and the leading provider of financing for small Canadian companies that sell to customers outside of Canada.

EDC's Trade Confidence Index (TCI) measures how Canadian exporters and investors are feeling about their business opportunities in the next six months.

The report noted that the lower Canadian dollar has had a positive impact on Canadian exports, with 61 per cent of Canadian business leaders confirming that it would help their foreign sales.

"The dollar has softened just as the US economy is kicking into high gear," said Peter Hall, Chief Economist, EDC. "Most exporters are welcoming the bonus."

Forty-one per cent of those respondents said that the lower loonie increased their cost competitiveness against international competitors.

Among the 33 per cent of business leaders who believe that 2015 would bring an increase in international business opportunities, nearly one-third of them pointed to the falling Canadian dollar as the reason for their optimism.

"The flipside of a falling dollar is that it will be more expensive for firms investing abroad," added Hall. "In the latest survey, a higher percentage of firms are planning to invest abroad, but thus far, the exchange rate does not seem to be a factor. We'll have to see if that persists in the coming months."

Hall forecasts that the Canadian dollar will hover around the US-90-cent level for the next two years.

Click here for more information about EDC and the Trade Confidence Index.