Who Benefits With The Falling Canadian Dollar?

Image Credit, PiggyBank

The Canadian dollar has been falling, and as always, the conversation turns to what it means for the economy and, more importantly, for everyday people. There’s an inherent contradiction in currency values—when the dollar weakens, one sector thrives while another suffers. Exporters celebrate because their goods become cheaper on the global market, making Canadian products more competitive abroad. Meanwhile, importers groan as the cost of bringing in foreign goods rises, meaning higher prices on everything from electronics to fresh produce. The real question is: who benefits, who suffers, and is there ever a perfect balance?

A weak dollar makes traveling outside Canada more expensive, as it takes more loonies to buy American dollars, euros, or yen. That means vacations cost more, cross-border shopping loses its appeal, and even students studying abroad feel the pinch. For the average consumer, a weaker dollar usually translates to inflation—higher costs for imported goods, from fuel to household essentials. This is where the pain hits hardest. A falling dollar also means that Canadian businesses that rely on imports—retailers, manufacturers using foreign parts—face increased costs that inevitably get passed down to consumers.

But on the flip side, exporters love a lower dollar because it makes their goods more attractive to foreign buyers. Canada’s resource-heavy economy, with oil, lumber, and agricultural products as major exports, benefits from a weaker currency. In theory, this should stimulate job creation in those sectors, boosting employment and wages. But does that offset the increased costs of living? Not necessarily, especially when wage growth doesn’t keep up with inflation.

The idea that a country should always strive for a strong dollar is also a simplification. If the Canadian dollar were too strong, it would make exports uncompetitive, hurting manufacturing and other trade-based industries. This is why the ideal currency value isn’t an absolute but a balancing act—a middle ground where businesses can remain competitive without crippling consumers. Central banks attempt to manage this through interest rates and other monetary policies, but they don’t control the global markets. Speculators, foreign investors, and geopolitical events all play a role in the dollar’s value.

So what’s the solution? Is there a perfect exchange rate that satisfies everyone? Probably not. The mechanisms that influence the dollar’s value—global trade policies, market speculation, government fiscal policies—are often designed to benefit financial institutions and large corporations, not the everyday consumer. Governments can implement policies to mitigate the effects of currency fluctuations, such as targeted subsidies or tax relief, but those are band-aids on a system that remains inherently imbalanced.

The real issue isn’t just the value of the dollar; it’s who controls the levers and whether they have any real interest in ensuring economic stability for the average Canadian. A fluctuating dollar, much like inflation, serves as a convenient excuse for price hikes that corporations often do not reverse even when the dollar recovers. That raises the question: is the system designed to find a happy medium, or is it simply designed to ensure that no matter what happens, those who control the money always come out ahead?