Why is the Canadian Dollar crap for international travel? (piefed.social)

submitted 22 hours ago* (last edited 10 hours ago) by SilentStriker@piefed.social to c/canada@lemmy.ca

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It's weaker than let's say Pound Sterling or the Euro for example. But, does a weak CAD affect international travel towards Canadian travelers? Since they'll be paying more whilst abroad requiring CAD in higher amounts to exchange for larger sums of cash (like if 1000€ = C$1617 that alone is a steep hike while C$1000 = 618€ see the difference?). Also, when you travel: do you bring CAD or exchange for USD first prior due to that having a better exchange rate?

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[-] potate@lemmy.ca 9 points 18 hours ago

I recommend you check out the Big Mac Index as it makes this stuff easier to understand.

The fact that $1CAD is worth less than $1USD or €1 doesn't mean much. It's just numbers printed on a screen/plastic/paper. What matters is what it buys.

The Big Mac Index was developed by The Economist to make this easier to understand. It calculates what what a Big Mac costs in each country against a common currency. It doesn't matter if $1USD = $1CAD or $1,000CAD. What matters is what that buys.

In 2022 - the year the graphic in the posted link corresponds to, a Big Mac cost $5.35 in the US and $5.17 in Canada when using the same (USD) currency. This implies that the effective difference in purchasing power is a paltry 3.5%.

If a burger is $5USD in the US and $7CAD in Canada, and the exchange rate is $1USD = $1.40CAD then those prices are the same.

I was just in Japan where I was paying 5000¥ for a fancy coffee - which was about $4.5CAD - roughly what I'd pay here in Canada.