Canadian dollar--Canadian exporters struggle with parity.

• Author: Stewart, Nick
• Position: NEWSMAKERS of the YEAR

A heavy emphasis on exports finds Ontario suffering the worst in the wake of the Canadian dollar's rise over the American greenback, according to Michael Gregory, senior economist with BMO Capital Markets.

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"Ontario's certainly been hit the hardest, but the general bottom line is that the state of the dollar is not a good thing," Gregory says.

In a reversal that would have seemed impossible even a few years ago, the Canadian dollar has seen a 25 per cent appreciation over the last year, while the United States currency has taken a 20 per cent plunge. Having reached parity on Sept. 20 and flirting with $1.10 (US) in early November, the Canadian currency has since been wavering mid-way between those two points ever since.

The downturn in the general American economy followed by the rise in the value of Canadian commodities, is attributed to the weakened U.S. dollar.

Paul Ferley, assistant chief economist with Royal Bank of Canada, says the increasing price of oil has played a key role in driving up the dollar. In turn, this has caused additional trouble for Ontario, an importer of oil with already high energy costs.

While areas of the province with heavy ties to mining have thrived on the strong dollar and strong commodity prices, the impact on major exporters and the forestry industry in particular has been devastating.

Earlier this year, representatives from Abitibi-Consolidated said a 1-cent increase in the Canadian dollar against the United States is equivalent to a $30 million hit to their operating revenue.

"You can ask the Ontario government to do everything and they can do it all, but every time the dollar goes up a penny, it wipes out any sort of initiative they've done," Andrew Casey, a spokesperson with the Forest Products Association of Canada.

"It's absolutely killing the industry because we sell the lion's share of our products south of the border."

Other industries such as tourism have not gone untouched by the high value of the Canadian dollar against the U.S. greenback.

Gerry Cariou, executive director of the Sunset Country Travel Association, says northwestern Ontario outfitters are being forced to institute rate increases in order to make up the difference between the currencies.

Northern retailers are unlikely to feel quite the...