How to steer your finances around a weak loonie — or even get ahead – National

The loonie is struggling, putting a premium on anything Canadians buy that comes with a price tag in U.S. dollars.

With the Canadian dollar languishing around 69.5 cents US — floating near four year lows compared to the American greenback — experts say there are some steps consumers, investors and travellers can take to ease the financial stress of a weak loonie, and maybe even get ahead.

The Canadian dollar has lost roughly five cents in value compared to its U.S. counterpart over the past year.

There are a number of compounding reasons for the loonie’s struggles, from a growing gap in policy rates between central banks on either side of the Canada-U.S. border to fears of president-elect Donald Trump’s threatened tariffs and other political upheaval.

Experts who spoke to Global News see a cloudy picture for the exchange rate in 2025, though forecasts for an economic rebound in the second half of the year might help lift the loonie.

“The name of the game for Canadians right now is to understand what they can do to safeguard their finances and how to even potentially take advantage of the current environment,” says Shannon Terrell, lead writer and spokesperson for NerdWallet Canada.

Terrell says there are a few obvious areas where consumers will see their loonie lose buying power. That includes anyone shopping online from U.S. sellers, and those travelling south of the border this year.

Grocers, too, will be contending with the weaker exchange rate when they’re buying food from U.S. suppliers.

“Anything that we are bringing in from the U.S. essentially is going to become more expensive, primarily electronics, clothing and unfortunately, food,” Terrell explains.

“So we may see that impact on our already bloated grocery bills.”

Consumers looking to save money in the meantime therefore ought to look domestically, Terrell recommends. That includes checking food labels at the grocery store to see if a product was grown closer to home and vacationing within Canada this year, when possible.

There are a few workarounds she recommends for those who are heading abroad in 2025, or who regularly shop in the U.S.

Some credit cards will waive foreign transaction fees, which Terrell says can otherwise account for two to three per cent of a purchase price on items sold in U.S. dollars.

“Using one of these credit cards isn’t necessarily going to narrow the gap between the Canadian dollar or the U.S. dollar, but it is going to help you save on fees, and that could be a major game changer,” she says.

Setting up a U.S. dollar-denominated bank account can also help to reduce conversion fees on transactions, she says, and could be a worthwhile investment for anyone regularly shopping or travelling south of the border.

With the Canadian dollar not stretching as far, the relative value of credit card perks and other travel points can also help make up the ground, Terrell suggests. Check the fine print of your credit card agreement, she advises, and look for discounts on car rentals, accommodation and flights that might come free with certain products.

Senior investment advisor Allan Small with iA Private Wealth tells Global News that the weak loonie does represent a challenge for Canadian investors when it comes to getting exposure to high-growth U.S. stocks.

“Your Canadian dollar doesn’t go nearly as far as it once did,” he says.

“However, I’m still going to tell you that you need to be invested abroad. You need to be invested in the United States. That is where the growth has been.”

Small notes that Canadians don’t necessarily need to see the loonie rise in value to get a solid return on U.S. investments. Ideally, the gulf between the Canadian and U.S. dollars is at least consistent when an asset is both bought and sold, leaving the return steady when it comes to foreign exchange rates.

But even if the loonie’s value has waned a few percentage points compared to the American greenback, Small argues that hopefully the investment has grown enough to offset any loses when cashing out.

“What we want more so than anything is a stable dollar. It doesn’t have to run out. It just has to be stable,” Small says.

As far as company-specific outlooks, the Canadian dollar can be a boon or a drag depending on where they do the bulk of their business.

Terrell says that some Canadian industries could also see a boost amid the weaker loonie, particularly tourism, as travellers from south of the border and overseas are seeing their dollars stretch further in Canada than before.

While Canadian firms buying from the U.S. will take a harder hit to their bottom line amid a weaker loonie, those selling abroad might see increased demand as a stronger U.S. dollar puts Canadian exports essentially on discount.

“It just depends on which side of the coin you sit on right now,” Small says.

Small expects that the loonie’s downward slide could ease off in the coming months as the Canadian economy stabilizes and economists eye a return to growth, in part thanks to the lagged effect of previous interest rate cuts from the Bank of Canada. Those forecasts remain cloudy, however, as the prospect of incoming U.S. president Trump’s threatened tariffs loom large over Canada.

Rather than make sharp swings in response to speculation, Terrell recommends using the next few months to stress test your budget by bolstering an emergency fund, re-examining spending habits and checking in on investment portfolios.

“The goal ultimately is to position ourselves to weather these various economic scenarios while still remaining flexible enough to take advantage of any opportunities as they arise,” she says.

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