Exchange Rate Between Canada & the U.S.

Exchange rates between United States and Canadian dollars are not fixed prices. Market forces such as supply and demand will make one currency worth more or less than the other.

Significance

Businesses and consumers in the United States and Canada use the relationship between these two currencies to make important decisions. When one country has a stronger currency, the other country will pay more for goods and services supplied by the alternate country.

Geography

Many communities along both sides of the U.S.-Canadian border are affected by the fluctuation in currency values. The further into the neighboring country, the less likely the other's currency will be able to used. Therefore, dollars need to be exchanged.

Considerations

Economic trends in each country have an influence on the currencies. The value of the U.S. dollar is heavily tied to productivity of business, technological innovation and the financial services industry, whereas the Canadian currency is tied to Canada’s natural resource industries such as oil, forestry and mining.

Effects

Negative changes in underlying economic environments of either country can create potential opportunities in the other. Travel and tourism, real estate opportunities, or starting or buying a business are examples where currency exchange rates have a bearing.

Tip

Exchanged dollars can be obtained at most large financial institutions, making purchases much easier. For current exchange rates, many online currency converters are available. One popular converter is provided in the link below.