USD

[sunward-hobbies]

The Canadian dollar has risen about 3 cents this week.

This is too much to handle. How do you price something not knowing the exchange rate 6 months from now.

Angelo

[shoplineca]

Angelo
If you were dealing in some really big dollars, you could go to the futures market where you buy and/or sell foreign exchange for a pre-determined amount.

Banks can accomodate these transactions for you. I do not know what the current minimum amount is but if a 3% change was causing that much effect on your business you may want to ask your banker about some options.

I use to play in those markets with a Company that was a division of Allis Chalmers many years ago where I had between $15 and $30 million USD to play with for months at a time.

I would have US cash, invest it in a USD security and have already bought the Canadian dollar amount at the same time that I would get in selling the USD upon its maturity at the point we needed the Cdn funds to complete or commence a major contract.

You can make or loose a bundle though if you are not on top of the global economic changes that affect currencies but at least it can make long term planning easier knowing how much you will be gettig for your US or Cdn funds weeks or months down the road.

Malcolm

[recped]

You must be on drugs?

Noon rates from the Bank of Canada (US Dollar)


04/12/31 05/01/03 05/01/04 05/01/05 05/01/06
1.2036 NA 1.2252 1.2238 1.2373

Our dollar has FALLEN 3.37 cents in the past week so cheer up!

I've followed currencies for years, specific predictions are very difficult. General trends are a bit easier but world events either acts of man or forces of nature can make the best experts look like fools. If you have enough consistant foreign cashflow you could lock in your exchange rates via the futures market, as with all commodity speculation it can be risky.

Personally I'm waiting for brief dips in the Canadian Dollar and exchanging then. Over the longer term (6 - 12 months) I expect our Dollar to decline relative to the US Dollar.

Speaking of "blips", we actually have one today! Thursday's noon rate is the second best (best was 1.2376) since October 25th, I'm going to be checking the rates in the morning, US Monthly Payroll reports come out Friday, if the US Dollar heads south I'm cashing in.

Check this CNN article which might give you the impression the US Dollar is headed higher, I don't have much trust in CNN as a source.

-----------------------------
Dollar rallies for 5th session
Greenback furthers gains versus the euro; bonds edge higher ahead of Friday's December jobs report.

January 6, 2005: 5:38 PM EST

http://money.cnn.com/2005/01/06/markets/bondcenter/bonds/index.htm

Of course one of the benefits of ecommerce over old style traditional catalogue mailorder is that you can adjust pricing (if the market will take it) very quickly.

Ben

[shoplineca]

By the way, my profits are down about 20% over last December due to the major change in our dollar from a year ago.

What I find perplexing is that when I started selling on eBay, 85% of my business was to the US. Now almost 2-years later, 75% of my business is to Canadians yet I still list in USD.

Malcolm

[recped]

Malcolm

If your pricing has stayed the same then it's bargain time for Canadian buyers. I also think Canadians buyers were, as usual, a little slow on the uptake with eBay.

My European sales have boomed over the same period with the strength of the Euro, US Dollars seem so cheap to them they stopped complaining about my shipping charges.

Ben

[shoplineca]

Ben
I got out of the European market a year ago however I will probably jump back in later this month and restart selling globally.

I probably walked away from 12% of my business and now that I am going full time with this, I will really need that extra 12% in sales.

I am always changing my product lines so I am seldom selling the same items from month to month. Actually where I lost in the decline of the Cdn dollar, I picked up a bit on paying less for my goods that are imported so the hit wasnt that bad however I sure enjoyed selling at 1.45 compared to 1.17.

It has been a vbargain for Cdn buyers and that is why my business in Canada has picked up so dramatically. That coupled with Cdns sick of paying the UPS and Fedex brokerage charges on importing as well as te American economy being in a slump.

Despite the declined Cdn dollar over December of 2003, my December 2004 eBay sales were greater than last years so I moved a fair amount of my product on eBay this Christmas.

Especially pleasing to me as I had let this business slump to sales of less than $1,000 per month for August and September which nearly cost me my PS status and yet 2 months later I am back to being eligible for silver again. DESPITE THE CDN DOLLAR!!!

Malcolm

[sunward-hobbies]

No I am not on drugs. For each USD you were getting roughly 1.20 either this week, Now 1.23.

The problem is the huge difference. Currencies do move. But the changes recently have been unmanageable.

3 cents is not the big deal. But I had a 1200.00USD sale ( not ebay related ) and the USD price was given at the beginning of October. Shipped near the end and got paid around the middle of November. I budgeted 1.26 and when I went to exchange got about 1.16. The drop cost 120.00CAD. All profit.

And not, I don't have 10 or 15 million to exchange.

Angelo

[recped]

Angelo

Just persist, I've been at this game a long time, pretty much for every time I've lost on exchange movements I've also had the reverse happen. Was not so long ago I was basing my pricing on a 70 cent dollar but converted at 62 cents that was sweet but a bit of a fantasy.

The volatility of the CA$ vs US$ is a relatively new thing but you can expect it to continue for some time (perhaps forever?), the "mighty greenback" was once the worlds most stable currency but this is no longer the case as the US economy more and more resembles that of a third world nation.

If you want to take a real flyer on currency speculation I would go very long on the Chinese Renminbi, it may take 20 - 30 years but I expect China will become the world's most powerful economy at some point.

In the meantime....I feel your pain.

Ben

[shoplineca]

Ben
20-30 years. Cut that time in half and I think that you will be right on the money.

They are moving ahead so rapidly that the only thing stopping them from hitting us with every consumer good we want to purchase is that their own demand has been surpassing their ability to manufacture.

Their quality controls improve and they are fast becoming an economic power that will cripple North American industry.

NAFTA was formed to protect our 3 North American countries from such an onslaught, although the initial fear was the Europeans however the deal was totally butchered by forcing it through with hundreds of impairments that have caused as many problems to Canad, the US and Mexico as it has solutions.

Generally, the 3 countries are now in worse shape in protecting themselves from countries such as China, primarily due to each country using the agreement for their own benefit and not for the mutual and long term benefit of the 3 participating countries.

Good thing I like Chinese food because we will be eating more of it in the years to come.

Malcolm

[recped]

Malcolm

You are probably right about the timing but so often even the suggestion of this possibility causes such turmoil (from Americans who have no idea what's going on beyond their borders) that I hesitate to state a time that is closer than "way off in the distant future".

Funny thing about NAFTA.....none of the countries involved seem to be happy with the result, all three countries seem to claim that it was supposed to be to their advantage but hasn't worked that way (at least that's how the spin seems to go).

Pass the chopsticks!

Ben

[shoplineca]

Ben
I was a consultant to NAFTA AFTER the deal, I have hosted 4 international conferences on free trade including NAFTA, GATT and the Maquilladoras (sp), and liased with the Cdn government following business trips I used to make into Latin America during their war years in the 1980s.

I have flown with Simon Reisman during his US NAFTA negotiations, my best friend was the Secretary of the Canadian Secretariat for NAFTA for more than a decade and I have been personally involved in offshore sales and finance since the late 1970s.

We all BLEW it BIG time with the existing NAFTA deal and rather than trying to renegotiate and amend some of it over time, each country took advantage of those poorly written and agreed-upon portions and loopholes over the last dozen years.

The agreement wasnt supposed to provide advantages for one country over another, it was to create a North American economy that could stand up to the pressure of outside products, technology, cheap labour, stronger currencies.

We were simply to take advantage of what each of our countries offered in labour, technology, resources etc. and make all 3 of us stronger to withstand external competition.

Our defeat will be as a result of GREED. The short-sightedness of so many to profit today at the expense of future generations will be our Roman fire as Nero fiddles away our futures.

What I dont understand is why do countries that are only a couple of hundred years old (Canada and the US) think they are wiser than countries that have existed for hundreds and thousands of years?

Malcolm

[sunward-hobbies]

Ben;
The problem with the Chinese currency is the government pegs it to the USD. It should be going up now and when it does, it will be a very fast move.

Model 3000 Flamemaster suit on

As for NAFTA, I thinks it need to stay.

As Canadians, we sometimes lose sight of what we have. We can now generally ship to the US tax free. No custom, fees, etc. Imagine a duty on most of the stuff you ship there.

On the other hand, when Canadian consumers bring something in, there is a 5.00 customs fee, gst and pst. Imagine how much business we would lose in the US market if the rules were the same in the US?

There are problems with NAFTA. Yes the US only thinks about itself. But we have something that is better for Canada than many people are willing to give credit for.

The problem always goes back to the VERY large retails that buy only the cheapest. And consumers don't say anything. Americans are losing many jobs in manufacturing, and no one is saying much. The old line that US jobs will be in high tech means nothing now. With all the talk of the benefits of free trade with China, no one is willing to say where the jobs will come from.

The sadist part is only the very large companies are benefiting and consumers still shop there ( read Walmart and Home Depot )

Angelo

[shoplineca]

Angelo
The current NAFTA Agreement needs some changes. The final 3 months before the NAFTA deal was signed, allowed alot of concessions to be made, mostly by Canada in order for it to not die and make Mulroney look like he lost the deal. SO he sent in Pat Carney during the last couple of months to put some pressure on Reisman to give in on some issues.

Unfortunately the Americans have broken terms of the agreement from time to time and when arbitrated, they ignored the rulings that came down finding them at fault.

So Canada then had to take the matters back before GATT, to have a more International group of peers find in our favour as NAFTA had no clout with the Americans even though they are signatories to the NAFTA agreement.

They use NAFTA when it suits them and then fall back and have us drag on a battle for another 3-7 years by forcing us to take our complaints up with GATT and even then, they take several more months to reverse the tarriffs they had been charging us for all the previous years.

When one of the trading parties doesnt respect the agreement nor respect any rulings made by the joint Secretariats following a complaint, the agreement only becomes weaker and its total value lessens.

We need a coalition between the Americas to protect our futures from coalitions already formed elsewhere however there is one partner who continually professes that they can do it alone ("You are either with us or against us, and if we have to go it alone, we will do that for the good of the American people").

Too bad to be so short-sighted that one man can almost cripple his nation and his economy and distance his people from the rest of the world in 4 short years and come back for another, "Life's Man of the Year".

Malcolm

Malcolm

[recped]

The problem with the Chinese currency is the government pegs it to the USD. It should be going up now and when it does, it will be a very fast move.

I agree which is why I say get in now! Of course I don't do as I say so I can have the opportunity to later moan about all the money I DIDN'T make!

Ben