Dollar Volatility: Who Should Care?

Extreme volatility in the Canadian dollar vis-a-vis the U.S. dollar and other main currencies has added to the challenges industries face in their financial planning process. At the same time, Canadian industries are more engaged in overseas trade than at any other time in their history, as they strive to remain competitive in today’s global economy.
Which Canadian industries are better placed to manage a volatile loonie? How can businesses best prepare for and respond to dollar volatility? What can policy makers do to help Canadian industries cope? Using indicators developed by Signal49 Research, this report examines industry vulnerability to fluctuating exchange rates and identifies industries that are internationalized and better able to cope with currency fluctuations. It argues that taking an “integrative trade” approach is a more effective currency hedging strategy and suggests measures that policy makers can undertake to prepare for and mitigate exchange rate effects on Canadian industries.