It’s the financial news story that everyone is talking about: The Canadian-to-U.S.-dollar exchange rate has been very unfavourable for the loonie lately.
How unfavourable? Since the beginning of the year, the Canadian dollar’s trading value has fluctuated between roughly USD$0.69 and $0.70—something not seen since the beginning of the COVID pandemic in early 2020. By comparison, as recently as late September 2024, the Canadian dollar was worth about USD$0.74.
Most obviously, this puts Canadian consumers at a disadvantage when they’re cross-border shopping, making online purchases from U.S.-based retailers and independent sellers, or travelling to the United States or countries where the U.S. dollar is widely accepted. While many Canadians are switching gears to avoid travel down south and/or focus more on buying Canadian-made goods, there are some expenses that can’t be avoided entirely.
For those situations, holding U.S. dollars can offer more predictability for budgeting and lessen the impact of fluctuations or a further decline in the Canadian dollar, particularly for large transactions. For example, if you have a big vacation or purchase coming up that is priced in U.S. dollars, buying the currency ahead of time at an exchange rate you find acceptable can make your trip expenses more predictable and blunt the impact of a currency decline right at the time of the travel or expense. One way to save in U.S. dollars is through accounts like the EQ Bank US Dollar Account, which offers a compelling interest rate—one of the highest in Canada for U.S.-dollar savings.
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EQ Bank US Dollar Account
- Interest rate: Earn 3% on your U.S.-dollar savings. Read full details on the EQ Bank website.
- Minimum balance: n/a
- Fees: n/a
- Eligible for CDIC coverage: Yes
The EQ Bank US Dollar Account also offers one of the best exchange rates in Canada. By combining these features and no monthly fees, the EQ Bank US Dollar Account offers Canadians a smart way to safeguard and grow their savings while preparing for U.S. expenses, including travel, cross-border shopping and investing. But first, let’s look at how the Canadian dollar fell so sharply in the first place.
Why is the Canadian dollar so weak?
The loonie is struggling for several reasons—a depreciated currency is never the result of just one factor. Conditions that have contributed to the plunging dollar include uncertainty in the federal government, a large federal budgetary deficit ($61.9 billion for 2023–24), uncertainty from potential tariffs by the Trump government, a stronger U.S. dollar, and a divergence in interest rates between the Bank of Canada and its American counterpart, the Federal Reserve.
It’s a lot to take in. But smart money decisions shouldn’t primarily be driven by emotions.
While all of these factors may paint a collectively bleak picture, it’s important to remember that dramatic currency fluctuations—in Canada and around the world—have been common for as long as currencies have existed. Don’t panic! Instead, seek out products designed to help you buy and hold U.S. dollars, like an EQ Bank US Dollar Account, which can reduce the impact from sudden fluctuations during economically turbulent times.
How to protect your U.S. savings in Canada
Think any U.S. savings you have aren’t protected by the Canada Deposit Insurance Corporation (CDIC)? With the EQ Bank US Dollar Account, your balance is eligible for CDIC protection (up to CAD$100,000 per insured category, per depositor).
What does a weaker loonie mean for Canadians?
As mentioned above, the loonie’s decreased value means much less purchasing power for Canadians when they’re travelling to the United States or purchasing something priced in U.S. dollars. For example, if the loonie’s value holds at USD$0.69, a kitchen appliance with a sticker price of USD$189 will cost almost CAD$273. The greater the price of the purchase, the bigger the impact fluctuations can have on the total. So, if you anticipate buying a big-ticket item, buying U.S. dollars equal to that expense at an exchange rate you find acceptable can help your future budget.
The poor exchange rate also makes travel to the United States—and other places where American currency is widely used—less attractive, as everything from hotels to restaurant meals and rental cars costs significantly more than it did just six months ago. U.S.-made products sold by Canadian retailers will be more expensive, too.
Protect your money with an EQ Bank US Dollar Account
With an EQ Bank US Dollar Account, you can take advantage of one of the best exchange rates to buy and hold U.S. dollars, which can offer greater certainty for budgeting and protect you from future declines in the value of the Canadian dollar. The account also offers several other benefits:
- EQ Bank’s uncommonly generous interest rate of 3%
- No monthly fees
- One of the best exchange rates in the Canadian banking market
- Quick, low-cost transfers of USD funds abroad through Wise
Interest on the EQ Bank US Dollar Account is calculated daily on the total closing balance and paid monthly. Rates are per annum and subject to change without notice.
This article is sponsored.
This is a paid post that is informative but also may feature a client’s product or service. These posts are written, edited and produced by MoneySense with assigned freelancers.
Read more about savings:
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- Should you get that promo rate? Check out the fine print first
- If you answer “yes” to these 2 questions, a notice savings account could be right for you
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The post What does a weak Canadian dollar mean for your savings? appeared first on MoneySense.
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Author : Michael White