Does A Weak Dollar Make Emigrating Less Attractive?

[Moving North]

The CAD has fallen precipitously over the past year. The end result is that the pay package I was offered is now worth 30% less than it was when converted to my country of current residence. The question for those who are thinking of going or are already there is how much does this affect the life of a Canadian who earns in CAD and spends in CAD? With the currency set to slide another 10% this year if this hit is translating into a decrease in the standard of living in Canada it is something to consider.

There are already articles out about significant inflation in food prices and Canadians avoiding international travel.

Thoughts?

 

[ttrajan]

Now no jobs available in Canada market due to oil crisis. Most of the company's laying off people and some are leaving Canada. Economy is in very bad shape now.

 

[Moving North]

Well, there is that. But I have a job offer outside the oil industry and the risk of a layoff really isn't the issue.

I am wondering more about the effect of the standard of living given the loss of purchasing power of the Cad in international markets.

 

[Quink]

It depends on your industry. If you work in tourism or hospitality then things are great - lots of Americans with high value currency are making their vacation plans in Canada rather than elsewhere.

If you're earning $CAD and staying in Canada the currency price isn't as big of a deal, it's only a factor when you try to change it to another currency. Don't look at it as being worth 30% less unless you plan to send money overseas.

There's 35 million people here in Canada - there will be winners and losers all the time when things change like this. If you have an alternative option rather than coming to Canada then you should run the numbers on your own personal circumstances, but if you're set on coming no matter what then you might as well not worry about it. Comparing it to the way things used to be will just send you crazy...

 

[Moving North]

Thanks,

I do have a few options, but have been concentrating on Canada for the past year or so. My biggest concern is whether an X dollar a year salary in Canada still feels like an X dollar a year salary or does it feel like X-30% given the devaluation of the CAD. If it is the former, the structural problems in my industry here outweigh the financial considerations. If it is the latter, then moving to Canada would be a bad idea.

Also, the central bank of Canada has set a boundary at - 0.5% for its interest rates. How does one save and invest for the future rationally in a negative interest rate environment?

 

[torontosm]

Thanks,

I do have a few options, but have been concentrating on Canada for the past year or so. My biggest concern is whether an X dollar a year salary in Canada still feels like an X dollar a year salary or does it feel like X-30% given the devaluation of the CAD. If it is the former, the structural problems in my industry here outweigh the financial considerations. If it is the latter, then moving to Canada would be a bad idea.

Also, the central bank of Canada has set a boundary at - 0.5% for its interest rates. How does one save and invest for the future rationally in a negative interest rate environment?

With the recent decline of the Canadian dollar, living in Canada has indeed become more difficult. Firstly, as you noted, it is much more expensive to travel or shop outside of Canada. As a result, those quick trips across the border to go to outlet malls are now no longer feasible from a cost perspective. Secondly, because companies import a lot of goods, prices of many things in Canada have increased. Groceries and everyday items, in particular, have become more expensive. Even gas prices haven't fallen as much as they should have (i.e., in lockstep with global oil prices) and are still very high relative to the US or other markets.

As for interest rates, we will never see negative rates here in Canada. However, we can expect to see continued low rates, which will further adversely impact the CAD.

 

[meyakanor]

I guess in the end, it really depends on which industry you are in. The company that I worked for had been expanding a lot (in terms of hiring and clients won) within the past year or so. Most of our clients are either American or European, and the weak currency certainly helps and is a boon for our business. I've noted a lot of anecdotes from people around me as well. If you are in finance or IT with a lot of American clients, then you're probably doing just fine.

Yes, the weak loonie sucks, but I don't buy iPad/iPhone everyday. I pay more for cauliflowers and carrots, but I pay much less for gas. Some families I know spend 100 - 150 dollars less on gas per month, and that more than offsets the increase in groceries. I remember paying over 1.40 CAD per liter for gas in the GTA just two or three years back, now it's in the low 90 cents per liter (Brampton has probably the cheapest gas in the whole GTA, with gas prices averaging, maybe in the low 80s).

I have not seen gas prices this cheap in Canada for a while now. If you drive to work (like tens of thousands of people who drive between the GTA and the KW area daily), then you will probably find low gas prices to more than offset the increase in food prices.

But I suppose, since our economy depends so much on commodities (or oil in particular), and thanks to our one-way bet of oil price appreciation within the past decade or so, the oil-heavy provinces (such as the Prairie provinces) have gotten hit very hard.