IS IT A GOOD TIME TO CONVERT USD TO CAD ?

Everyone is confused about the fact that when should they convert their USD to CAD. Canadian Dollar is losing constantly and since the beginning of March Canadian Dollar has lost around 10% of its value against the US Dollar. So it is looking like the conversion of USD to CAD is no good for normal people. The answer to the question of converting USD to CAD depends on the fact that when the funds are needed to you.

Reviewing different reasons due to which the FX market is in turmoil may be a good step before deciding to convert your USD to CAD. The Canadian Dollar started under the pressure initially from the beginning of the year. Rallies were expected to follow the signing of US-China and USMCA trade agreements. This signing-off agreement did not occur due to an outbreak of coronavirus inChina. This prevented the growth of China's economy which gave rise to the fear of global economic slowdown. The fear grew more when the covid-19 outbreak occurred around the globe.

Another factor that affectsthe conversion of USD to CAD  is the fact that due to this economic slowdown, Central banks including banks of Canada adopted dovish monetary policies that can support their economy. Also, Saudi Arabia and Russia’s oil talks deteriorated and theywent into a price war that made show that there is a 60% drop in West Texas intermediate (WDI) prices within a month. All these reasonsaffectgreatly the decision of conversion of USD to CAD. Due to all this panic in the Globalmarket started taking over the main matter of slowing the global economy. During this time World Health Organization(W H O) declared the covidoutbreak as a pandemic. This made Global investors invest only in preferred, US dollars. This led to an increase in the value of US dollars and this result is the Downhill progress of Canadian Dollars along with the major G10 currencies. Due to all this now we are considering the conversion of USD to CAD.

 

Is it now a good time to convert USD to CAD

 

There is a huge impact of covid-19 on the global economy. This pandemic leads to the closing of International borders and restricting travel. This pandemic has forced a higher percentage of the population to stay inside. But government leaders and Finance ministers are doing everything they can to stop the panic in the global economy and conversion of USD to CAD plays an important role. On July 13th G7 met and agreed to support the financial market.

Through a program named the “Pandemic emergency purchase” program, European Central banks provided liquid funds to the markets. President Trump isdiscussing a trillion-dollar stimulus plan. The bank of Canada cut its benchmark rate wise and the Government of Canada announced an 87 billion coronavirus economic stimulus package. This is to stop the talks about the conversion of USD to CAD. This massive announcement and monetary stimulusare made just tolimit investors from panic selling. Although, the Canadian Dollar lost its value in the market in 2020, points to the fact that the conversion of USD to CAD currentlymay be prudent.

To factor in the reasons for the conversion of USD to CAD,the Canadian Dollar has more value than USD, once. But now the tables have turned and it is not a very good idea to convert USD to CAD.

Also, almost 50% depreciation of the domestic currency, points to the fact that conversion of USD to CAD may not be a very bad idea. In the past few weeks, there is a steep devaluation in the Canadian Dollar. In the past 20 years, 10% devaluation in such a small period is never heard of. This makes the conversion of USD to CAD more charming.

The Canadian Dollar valuedup to 80 cents US dollar perCad after a dropdown to68.08 for 1 Canadian dollar. Currently,the Canadian dollar is trading below its five-year low. This also supports the fact that conversion of USD to CAD is not a bad idea.

The companies which have regular US dollar receivables it is very easy to decide on the fact that is it the right time to convert USD to CAD. The USD CAD trading in 2019 was around 1.2950 to 1.3650 and with the USD CAD currency pair closing this year at 1.3050, there is an expectation of a similar range for this year.For these Companies, conversion of USD to CAD is not a big issue.

Different Canadian companiesthat have a fixed predictable US dollar cash flow can consider a conservative hedging program thatincludes mitigating future wild currency easily. A simpleand easy way to smooth out currency swings is to convert 50% off USD to CAD on a rolling 3 to 6-month basis. For instance, if you get USD on the 25th of each month you can convert half ofthis USD to CAD today for values of upcoming months. This easy strategy can help smoothenout the FX rate fluctuations over the year.

Nobody can perfectly answer the question of whether it is a good time to convert USD to CAD. The conversion of USD to CAD is beneficial or not will be known in time but in this environment, the saying that “Bull makes money bear makes money but the pics get slaughter” is always applicable.

 

Why interchange financial is better than other countries-

Interchange Financial provides better exchange rates in Canada which is based on Exchange Rate Guarantee. We are a company specializing in foreign currency exchange. We cannot be matched by any banks or small players. Along with currency exchange we also provide travelling services, buying and selling of property, student, and transferring of money. You can get a live rate on our website and also transfer from account to account services.

Visit: https://www.interchangefinancial.com/usd-to-cad/