Whenever the Canadian and U.S. dollars fluctuate, a tale of two cities plays out in International Falls, Minn., and Fort Frances, Ontario.
These days, businesses on the Canadian side have the better end of the deal.
The loonie has dropped to its lowest level since 2004, worth just 77 U.S. cents. Put another way, a U.S. dollar is now worth $1.31 Canadian.
The shift, caused by low oil prices and the likelihood that the Bank of Canada will cut interest rates even as the Federal Reserve plans to raise them, means Canadian goods are cheaper for American shoppers.
Meanwhile, Canadian shoppers who are usually fond of American grocery stores and gas stations are staying home, which affects both tourism in the Twin Cities and small shops along the border.
“It’s our turn to take the hit,” said Patti Ballan, owner of Ballan Furniture in International Falls. “It goes both ways over the years.”
Ballan said shoppers in Canada are more aware of currency shifts than American shoppers, and the number of Canadian patrons at her 51-year-old store has slowed to a trickle.
Her drivers usually make a delivery each week to a buyer across the border, but orders like that have plummeted in recent months. The furniture store is now making about one delivery per month to a Canadian buyer, and foot traffic has diminished, too.
“We’ve seen a significant drop in customers,” she said.
The opposite is true at Sunset Country Ford, about a mile away as the crow flies across the border on the west edge of Fort Frances. American buyers are showing up more frequently.
“It’s just starting, especially here in the last two weeks,” said Jamie Beasant, the dealership’s sales manager.
Americans have bought three vehicles in the past week there, and Beasant said the key factor is the currency.
“It was definitely the dollar, for sure,” he said. “It definitely opens the doors up for us across the border,”
Minnesota depends on some 700,000 overnight visitors from Canada each year, making the northern neighbor a key customer for the state’s tourism industry.
Canadians — many of them from Thunder Bay and Winnipeg — visit the Twin Cities to take in Twins or Wild games and shop at the Mall of America, said John Edman, director of Explore Minnesota, the state’s public-private tourism industry.
“Canadian visitors are extremely important to Minnesota,” he said.
The Twin Cities is a destination regardless of currency exchange rates. Many people from Manitoba and Ontario who want to spend Saturday buying sales tax-free clothing at the Mall of America and Sunday cheering for the Vikings will probably do so even if the Canadian dollar doesn’t go as far.
But some will hold off.
“It does cause some visitors to pause a little bit,” Edman said. “There is an impact.”
And for the supply chain that crisscrosses the border, the currency situation is probably a wash.
Winnipeg-based bus manufacturer New Flyer has factories in St. Cloud and Crookston, and a supplier network across the Upper Midwest. The firm expects to spend more in Canadian dollars than it will take in during its fiscal year 2015, so the weakness of the loonie is for now actually a benefit.
Mark Fontana, who owns Rainy Lake Sports & Tackle in Fort Frances, said the weak loonie is a double-edged sword for him. He’s seen an uptick in American visitors to his shop, but he must mark up prices because much of his tackle is made in the United States and he must buy it in U.S. dollars.
“Things just kind of bounce around. Sometimes the exporters are making money, sometimes they’re not. Sometimes the importers are making money, sometimes they’re not,” he said. “It just goes in cycles.”