The fluctuating loonie might not have a big impact on most Canadian businesses after all, according to a new survey by the Bank of Montreal (BMO).
Fifty-four per cent of business owners overall said changes in the dollar have no impact on them, the BMO poll said, and 55 per cent of those who head small businesses – described as firms with less than 50 employees – said the same. This contrasts with 27 per cent who said their businesses benefit from a weak dollar and 18 per cent who believed their business suffered when the loonie falters against the U.S. dollar.
The poll also showed that respondents expected the Canadian dollar to drop to an average of 89 cents US by the end of this year. The Canadian dollar has held near the 90-cents US mark for the past few weeks.
the valuation is on par with forecasts from the bank, which anticipates the loonie will drop to 87 cents US by the end of this year and stay within the 85- to 86-cents range in 2015.
Determining who wins and who losses when the dollar falls “very much depends on the business and sector they’re in,” said BMO chief economist Doug Porter in a statement. “Certain industries tend to benefit from a weaker currency – it could be a mixed blessing for some and for others it could be a curse.”
On average, Porter said, producers tend to benefit and consumers tend to lose in that environment. Broadcasters, sports teams, utility companies and retailers tend to be potential losers from a lower loonie, while manufacturers, tourism and resource companies tend to win.
The BMO survey also found that those in Atlantic Canada (62 per cent) and Alberta (55 per cent) were the most likely to say a fluctuating dollar does not impact their business, while those in Saskatchewan and Manitoba (32 per cent) and British Columbia (31 per cent) reported that their companies would fare better amid a weaker dollar.
It also found that sentiment varied across sectors. Business and financial companies (76 per cent) were the most likely to say they wouldn’t be affected by a weak Canadian dollar, followed by 61 per cent of energy companies and 57 per cent of service sector companies.