The Canadian dollar lost five cents in value compared to the U.S. dollar in one day last month.
It dropped on Jan. 21 after the Bank of Canada lowered its benchmark overnight interest rate from 1 percent to 0.75 percent. The benchmark rate determines bank lending rates, and lowering it is one tool central banks use to increase money supply. The Bank of Canada cut rates in response to the drop in oil prices.
At press time the Canadian dollar was worth 81 cents compared to the U.S. dollar. That’s a 20-cent drop from January 2013, when the Canadian dollar was worth $1.01 U.S.
Despite the drop, shopping in Bellingham is still a bargain to some Canadians. Cars with British Columbia license plates filled the Trader Joe’s parking lot on James Street in Bellingham on Saturday after the Canadian dollar dropped.
Terry Dawydiak and Jodie Wilson of Vancouver, B.C., come to Whatcom County to shop a couple times a month, and the weak loonie won’t keep them away, they said.
“Even with the 20 cent difference in value it’s still a bargain to shop here,” Dawydiak said. “Not as much, but it’s still worth it. It has to drop a bit more before we would stop coming.”
A report released Jan. 26 by TD Economics, a group of Canadian and U.S. economists, predicted that the loonie will reach a low of 75 U.S. cents by early 2016 due to low oil prices, but will rise to 85 cents by the end of 2016.
Dawydiak and Wilson, who are married, have a NEXUS pass that they got primarily for shopping at Trader Joe’s, they said. On a Saturday last month they bought four bags of their favorite Trader Joe’s-brand items after picking up a package at their mailbox in Blaine and dining in Fairhaven.
The amount of southbound personal vehicle border crossings into Whatcom County in December 2014 was 21.6 percent lower than it was in December 2013, according to numbers from Cascade Gateway Border Data Warehouse. However, border crossing numbers vary from month to month, and other than a drop in the last quarter of 2014, there’s not much correlation between the low Canadian dollar and southbound border crossings.
Traffic at the Bellingham airport, where more than half of all customers are Canadian, was 8.6 percent lower in December 2014 than December 2013.
Don Alper, director at Western Washington University’s Border Policy Research institute, said it’s surprising that border traffic hasn’t decreased more in the last two years.
“What’s been puzzling over the last couple years is the volume of travelers has actually maintained its earlier pace. The number of crossings seems to be pretty robust,” he said. “I guess what it tells you is Canadians have gotten used to the idea of shopping and recreating in the northern part of Washington state.”
Like Dawydiak and Wilson, the Trader Joe’s shoppers, a lot of B.C. residents shop in the U.S. as part of an all-day outing.
“If Canadians are looking for a place to travel for a day or two, they’re somewhat hemmed in by their own geography, so the natural tendency is to come south,” Alper said. “There’s a natural tendency to come in this direction.”
Hotels in Bellingham may be impacted by the weak loonie as shoppers take advantage of low gas prices and avoid overnight trips.
“You still see people shopping but you don’t see them staying over night now,” said Larry MacDonald, general manager of the Best Western Lakeway Inn.
Managers at hotels near Bellis Fair Mall and other retail shopping centers didn’t return phone calls for this story.
Alex Nephew, general manager of the Hampton Inn at 3985 Bennett Drive, said his hotel hasn’t been affected by the declining Canadian dollar. The Hampton Inn is one mile from the airport.
“We haven’t seen too much of a drop just because of our location. We’ve still seen lots of Canadian travelers come through,” he said. “I don’t get many shoppers.”