Soaring Canadian 'Loonie' Spurs U.S. Border Shopping

BUFFALO, N.Y., Sept. 24, 2007 — -- At the toll bridge at Grand Island, N.Y., on the border with Canada, the guard tells drivers to ignore the sign that reads, "20 percent discount on Canadian money."

"We take Canadian quarters," he said, a departure for most border businesses, who for years loathed accepting Canadian money -- of any denomination.

But with the Canadian dollar reaching — and passing — parity with the U.S. greenback for the first time since the 1970s, Canadian bills — even Canadian coins — are suddenly a welcome sight for economically hard-hit areas like western New York.

Despite tougher security measures at the U.S. border, and waits some days of up to two hours or more, Canadians are flooding into U.S. border communities looking for bargains.

"On the weekends, our customers are 30 to 40 percent Canadian," said Kimberley Nedopok, assistant manager at the Brookstone store in Buffalo's Walden Galleria mall, which sits about five miles from the border.

Brandi Webber, manager of the Famous Footwear outlet in the same mall, puts her drive-in Canadian customer base at 50 percent to 60 percent.

The main lure for Canadians is price. The weak dollar means virtually all American goods are cheaper south of the border, and more expensive to the north.

Torontonian Jim Stefan said he collects Hot Wheels car models and buys the ones he can't get in Canada in the border-area malls like the Buffalo's Galleria. With the soaring loonie, he said, he's scooping them up like candy.

Isabel Castillo, also from Toronto, found some good prices on her shoe shopping trip to Buffalo, "especially when the stores have sales. But taking the trip down is also a fun thing to do, " she explained.

According to a study by the Bank of Montreal, Canadians pay 10 percent to 34 percent more for American goods in Canada — from books and magazines, to furniture, clothes and cameras.

Just nine years ago, Canada's dollar coin, known as a "loonie" for the loon depicted on its face, was desperately flapping at 63 cents to the U.S. dollar. Some U.S. currency traders called it the "northern peso."

Today, with confidence in the U.S. dollar sinking across the globe, and Canada's currency seen as backed by an economy with abundant raw materials — including oil and a deficit-free government — the golden loonie is shining bright.

Some analysts believe Canada's dollar could pass its all-time high of $1.04, reached in 1974.

But the weak U.S. dollar has a downside for Canadian businesses.

Mancene Sinclair doesn't see her dentist any more. The Niagara Falls, N.Y., tour promoter said a few years ago, when the greenback was worth $1.30 or more Canadian, she would make the short trip across the Rainbow Bridge to a dentist in Canada, and save a bundle.

Now with two currencies at parity, "I need to start the whole process (of finding an American dentist) again," she said.

While tourism to Toronto is in a slump, Niagara Falls, N.Y., had its best Labor Day weekend on record, up about 100,000 from the year before.

Along with the sea of Ontario license plates, another sign Canadians are flying into American shops are the piles of bags, wrappers and store boxes in mall parking lots, Sinclair said.

The limit on the amount of same day shopping under 24 hours is $50 and after 48 hours $400. Canadians often toss their old clothes and bags and wear their newly purchased U.S. clothes back home.

"They leave a lot of litter in the parking lot. But that's another issue," she said.

Enzo Mancuso, owner of two upscale Italian restaurants in Windsor, Ontario, said he measures the 50 percent to 60 percent drop in his American diners by his phone bill. Four years ago, he had two and a half pages of U.S. phone calls. "Now it's five lines," he said.

Mancuso expects the Canadian dollar to keep rising and his customers to begin dining in America. Already, he said, the drop in U.S. business from the war, perceived border problems, job losses at nearby American auto plants and the dollar, has caused a huge drop in business all across the city. This month alone, two restaurants with a combined presence of over 80 years in the city closed, he said.

While proud his dollar is strong, Mancuso said he'd "be a lot happier if it went down a little."

Some think American chain stores in the United States aren't doing enough to lure Canadian shoppers who live near the border.

At Dick's Sporting Goods, manager Rob Merchant said he could probably increase his sales if the Pittsburgh-based company let him stock Canadian team sportswear in his Buffalo outlet, but they don't.

Despite this, "ever since the spring, Canadian business has been up dramatically," Merchant said.

But America's border retailers don't expect the same boom in Canadian border shopping as they had in the early 1990s.

In 1991, with the Canadian dollar at just 89 cents, Canadians made nearly 60 million one-day shopping trips to the United States and spent about $5 billion.

Last year, Canadians made 23.5 million of those shopping trips to the United States.

The main reason for the drop: tougher border security.

Before Sept. 11, Canadians could pass through U.S. Customs with nothing more than a driver's license. Today, every Canadian needs a passport.

Returning Americans also need passports — a rule temporarily suspended due to a backlog of U.S. passport applications — and that, along with the weakening U.S. dollar, has caused many Americans to stop traveling to Canada.

In 2002, Americans made nearly 41 million trips to Canada, according to Statistics Canada. Last year, it was fewer than 29 million. By the middle of this year, the number was down to just over 11 million, down 12.7 percent from the year before.

In July, overnight car travel from the United States to Canada dropped to its lowest level in 22 years.

Tom Weeks, president of Buffalo-based Grand Tours, told Toronto's National Post newspaper his bus tours to Toronto have been replaced by tours to U.S. destinations, because local seniors "are scared to death of the border."