Canada dollar getting closer to ours

The Canadian dollar breached 94 U.S. cents for the first time in 30 years Friday, and analysts speculate it will be worth as much as the struggling U.S. greenback by year's end.

But don't look for the high-flying loonie — named for the loon pictured on the $1 coin — to give more than a modest boost to the border economies of northern Washington.

High U.S. gas prices, unpredictable border delays and more shopping choices in British Columbia's lower mainland will temper the impact of the soaring Canadian dollar, said Hart Hodges, director of Western Washington University's Center for Economics and Business Research.

The Canadian dollar closed at 94.18 cents in New York trading Friday — the highest it's been since July 1977. (It hit an all-time low of 61.79 cents on Jan. 21, 2002.)

The higher the Canadian dollar's value relative to the U.S. dollar, the cheaper that U.S. goods are to Canadians. Conversely, when the greenback rises against the loonie, Canada looks like a bargain.

Meanwhile, the Canadian government recently abolished a tax refund for nonresidents, making trips to Canada more expensive.

Visitors had been able to claim a refund of the 6 percent GST, a federal tax on lodging and other goods and services. The Canadian government abolished the GST refund (formally called the Visitor Rebate Program) for individual travelers in April as part of 2007 budget cuts.

Border-crossing basics

With the Canadian dollar booming, the United States has become more afford-

able for Canadians. That means more British Columbians are likely to be coming to Western Washington this summer to shop and sightsee — and that means the U.S.-

Canada road-border crossings may be more congested than ever.

On Easter weekend, travelers waited for hours to enter the United States at the Peace Arch crossing at Blaine. The delays could be even worse on summer weekends, especially holiday weekends.

How to get information on border delays — and avoid some of the lines:

The Washington State Department of Transportation shows border wait times, for driving northbound into Canada and southbound into the United States, at www.wsdot.wa.gov/traffic/border/ Links to Web cams also show border lines.

The British Columbia Ministry of Transportation has a regularly updated phone line on southbound border wait times: 604-542-4380.

Most drivers use the main Peace Arch border cross-

ing at Blaine to cross into Canada (or return to the United States). There are alternatives. The Pacific Highway Crossing is about five minutes to the east (watch for the signposts on Interstate 5 just before the border, or take Route 15 from the B.C. side). A crossing between Lynden and Aldergrove, B.C., is about a half-hour drive to the east.

Try to avoid peak times: Late afternoons and evenings on Fridays and Sundays. Entering the United States often is significantly slower than going into Canada because U.S. security is more stringent.

If you're a frequent traveler, consider applying (and paying) to join the Nexus program, a prescreened, fast-lane inspection process at some border crossings (including Blaine) and airports. Information: www.cbp.gov/xp/cgov/travel/frequent_traveler/nexus_prog/nexus.xml

Have proper identification. Proof of citizenship, such as a birth certificate (with photo ID such as a driver's license) or a passport, is required. While passports are legally required for air travel between the United States and Canada, they are not now required for land travel (but are expected to be required as early as January). If you have a passport, take it; it will smooth the way.

-- Kristin Jackson

Historically, when the Canadian dollar was high, the shops and restaurants — and, more recently, casinos — of Whatcom County would be filled with B.C. residents.

But while some businesses report increased Canadian trade, the overall effect has been somewhat muted.

Crossings drop

Border crossings from B.C. into Washington are about half of what they were in the early 1990s, the last time the Canadian dollar was worth so much, Hodges said. And, he added, they haven't grown by much since the loonie's rise started more than four years ago.

"You had people saying, 'As soon as it gets to 70 [U.S. cents], people will start coming,' " he said. "Then it was 80, then 85, then 90."

U.S. gas prices topping $3 a gallon are one big reason. While gas is still more expensive in British Columbia (where it costs about $1.15 Canadian a liter, or roughly $4.30 a gallon in U.S. dollars), the gap has narrowed.

"The Canadian dollar is rising, but it's going to cost [Canadians] more to get down here because gas prices are higher," said Joe Giannamore, a state labor economist for Whatcom, Skagit, Island and San Juan counties.

Hodges also noted "the maturation of the lower mainland retail market," with more stores offering a wider variety of products, as a factor lessening the lure of the States.

Still, some Bellingham-area businesses say Canadian trade has picked up.

At Bellis Fair, a 130-store mall just off Interstate 5 in Bellingham — about 55 miles south of Vancouver, B.C. — the shopping center has seen "double-digit" increases in sales each month this year, compared with the same period in 2006, said Cara Buckingham, the mall's marketing manager.

There wasn't much of a post-holiday slump, she said. "It's kind of like Christmas when we look at the sales report now."

More Canadian shoppers

Some of that is due to the overall growth in the Bellingham area. But there also are a lot more vehicles with Canadian license plates parked at the mall, she said, especially on three-day holiday weekends.

Most Canadian visitors, however, don't stay long, much to the chagrin of the Bellingham-Whatcom County Tourism office. "They come over and hop back in one day," said spokeswoman Caroline Kinsman, although the number of tour buses to area casinos has picked up, she added.

"We love what it's done for us but would love to see a little bit longer stay," she said.

Tribal casinos have joined malls as major tourist draws. When Hodges' center surveyed three area casinos six months ago, they said half of their patrons had come from north of the border.

"I've been in a couple of the casinos down here, and I'm always running into Canadians," Giannamore said.

The latest surge comes after CIBC World Markets economists predicted the Canadian dollar will be worth as much as the U.S. dollar by the end of the year. That last happened in November 1976.

The CIBC report cites an expected rise in Canadian interest rates and stronger-than-expected economic growth, along with hot commodity prices and an "avalanche" of corporate takeovers that require foreign acquirers to deal in Canadian dollars.

"Between red-hot commodity and energy markets and huge capital inflows associated with an avalanche of [acquisition] deals, the Canadian currency has plenty of octane left to take a concerted run toward parity against the greenback," CIBC World Markets chief economist Jeff Rubin said.

Meanwhile, the Federal Reserve looks set to cut rates late in the year, reducing the attractiveness of the American dollar, Rubin said.

Bank of Montreal economist Sal Guatieri agreed that the Canadian dollar could surpass the U.S. dollar in coming years.

"The Canadian dollar is not considered a weakling currency as it was when it was trading at the 60-cent range, so that negative stigma attached to the weak loonie four or five years ago could completely evaporate if we do hit par with the U.S. dollar, and that might spur our currency to even greater gains," Guatieri said.

Manufacturers hit

But not everyone is happily throwing back vacation-resort margaritas at the news of Canada's rising dollar.

That nation's manufacturing sector used to enjoy when the struggling currency made their goods less expensive internationally.

The sector's return on investment now is lower due to a less-favorable currency conversion, and analysts predict some manufacturers eventually could be priced out of global markets.

"Contracts they put in place early in the year that they thought were worth $1 million are now worth 10 percent less, so when they get paid, they're going to be paid a lot less than they contracted for," said Jayson Myers, senior vice president and chief economist at Canadian Manufacturers and Exporters.

In the first three months of 2007, imports from Canada into Washington fell 14.3 percent, while Washington exports to Canada rose 4.8 percent, according to data compiled by World Trade Center Tacoma.

While it's too early to measure manufacturing-job losses due to the rising dollar, there has been a dampening in industrial activity in export-dependent eastern Canada.

"We've developed two economies in Canada," Myers said. "In western Canada, you've got a booming oil-and-gas sector and a booming economy because of the dollar, but in Ontario and eastern Canada, it's really suffering because of weak economic activity due to the rising dollar."

Times business desk editor Bill Kossen, Times travel staff writer Kristin Jackson and The Associated Press contributed to this report.