“This is not the ideal time for snowbirds to go to the United States,” says Kyle Dahms, economist at the National Bank.
Indeed, the Canadian dollar is not doing well.
It is currently trading at US$0.69. And to have one American dollar, you have to give 1.43 Canadian dollars.
The loonie is therefore at its lowest level since the start of the pandemic in March 2020.
“This is not good news for snowbirds. Everything will cost 6% to 7% more than last year,” adds economist and speaker Francis Gosselin.
And the National Bank's forecasts for the first two quarters of 2025 are no more rosy. The Canadian dollar could remain at a depreciated level, below US$0.70, until halfway through the new year.
It doesn't slow down the snowbirds
Despite everything, the president of the Canadian Association of snowbirdsGarry McDonald, does not believe that the fall of the Canadian dollar has slowed seasonal migration south.
According to him, the market for snowbirds is less sensitive to exchange rate variations than the traditional travel market.
“I think that the snowbirds “Canadians will adapt, as they always have, and will make the necessary changes to their discretionary spending,” he says.
“In the early 2000s, the Canadian dollar reached its lowest level at US$0.62, which certainly did not prevent the snowbirds to go to their winter homes,” adds Mr. McDonald.
The latter expects that the 900,000 snowbirds Canadians – around 250,000 of whom are Quebecers – will still take refuge with our neighbors to the South this year.
Nearly 86% of snowbirds Canadians are heading to the United States during the winter season, according to a survey by snowbirdadvisor.ca. Florida is the favorite state, followed by Arizona and California.
On the other hand, many Canadian tourists are starting to leave the United States for Mexico, where the cost of living is more affordable and the weather is milder.
It's Trump's fault, but not only
If the Canadian dollar is in free fall, it is partly the fault of Donald Trump, but also the poor performance of our economy, indicate the economists interviewed by The Sun.
The loonie saw its value fall when Mr. Trump threatened 25% tariffs.
“Normally, when a tariff is applied to a country, it is expected that the currency of that country will depreciate while the state applying the tariff sees its currency appreciate.”
— Kyle Dahms, economist at the National Bank.
“And since we anticipate that the Canadian economy will take a hit with these tariffs, then we sell the Canadian dollar as it is perceived as less certain, which lowers its value,” adds Francis Gosselin.
Already the Canadian dollar is much less in demand than the American dollar, because the returns are more attractive on the American stock market than on the Canadian one.
“Additionally, the Canadian economy is currently underperforming. Foreign investors are therefore less inclined to put money here. They will prefer the United States to have a better return on investment,” says Mr. Gosselin.
The Bank of Canada does not have the same luxury as the Federal Reserve. The latter is less inclined to quickly lower the key rate than our central bank, which must compensate for a weaker economy, mentions Kyle Dahms.
“These decisions have a big impact on the performance of currencies and this also explains the gap between the value of the Canadian and American dollars at the moment,” he adds.
Note that the Canadian dollar does not necessarily perform worse than other G10 currencies. Rather, it is the American dollar that has strengthened relative to the others.
No more American tourists here
The depreciation of the Canadian dollar does not only bring bad news.
“It’s very favorable for the tourism industry. […] For a trip costing $2,000 to $3,000, the drop in the Canadian dollar represents savings of around a hundred dollars, which could attract more Americans to Canada,” says economist Francis Gosselin.
This situation should rejoice merchants and hoteliers in the greater Quebec region, since Destination Québec city revealed on Sunday that Americans have increased their tourist spending in the capital this year. And the fall of the loonie could accentuate the increase in purchases.
Canada is primarily attractive for tourists from the United States, because the exchange rate of the Canadian dollar has remained practically the same with the Euro, the British pound or even the yen.
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