TORONTO - Canadians looking to get their hands on relatively cheap U.S. dollars with the help of a soaring loonie should buy now and resist the temptation to wait in the hope of profiting more from currency fluctuations, observers say.
"We have seen a pretty massive move over the last couple of months (and) I don't think you're ever going to able to pick a top (to know when is) the best time to buy U.S. dollars with Canadian dollars,'' said Steve Butler, director of Foreign Exchange trading at Scotia Capital.
"I would say to anybody: Do what you have to do. It does move a lot intraday, it does move a lot from week to week, but they are very attractive levels for people to be travelling and to be using their Canadian dollars.
"I wouldn't be too concerned about missing the boat on the Canadian dollar strength.''
The Canadian dollar edged down 0.17 of a cent to 104.09 cents US at midday Wednesday, as it continues to lose ground since it hit a record high of 110.31 cents US a week ago, representing a rise of more than 25 per cent this year.
The gains have been sending Canadians across the border in record numbers, and encouraging them to travel more. They've also been staying away longer, since everything from U.S. hotels to golf games are much cheaper.
Yet despite recent volatility, experts say Canadians should resist the temptation to try to cash in at levels above US$1.10 record since it's impossible to predict whether the loonie would climb that high or how long it may stay that way.
"You almost have to say: `This is a good level today and I'm going to do it today,''' said Adrian Mastracci, portfolio manager and financial adviser at KCM Wealth Management Inc. in Vancouver.
"Can it go to $1.15? Maybe. Can it go back to $1 or 95 cents? That can happen too. You take your risk either way.''
Mastracci said he has exchanged funds several times for clients looking for a portfolio in U.S. dollars, hitting exchange rates that pegged the loonie at 98 cents, parity, $1.03 and $1.07.
"We didn't hit the top, we've been averaging,'' he said. "If you've got a big enough portfolio, averaging will be fine.''
For those looking to buy U.S. dollars to shop or travel abroad, the best bet is to exchange the money before crossing the border to avoid charges on banking machines, debit cards and credit cards -- or even risk not getting the U.S. dollar at par.
"There are a lot of places in the United States that still haven't accepted the fact that we're at par or better,'' said Gerald Brissenden, president of the Canadian Snowbird Association, a 70,000-member organization representing Canadian travellers, many of them seniors.
"They don't seem to like the fact that their money is not as good as the Canadian money now. They used to call our money the `Monopoly' money.''
He said many places in Florida just won't accept Canadian money because it's too costly to exchange, and he recommends exchanging the cash at a local bank before taking the trip.
"You get the up-to-date rate at the bank. They're up-to-date by the hour,'' he said from Florida. "Any time you go through a third party, there will be an additional cost.''
That applies to credit cards, debit cards and banking machines -- all of which involve questionable conversion rates and a 2.5 per cent markup because of transaction fees.
The Canadian Snowbird Association has its own currency exchange program, and offers to transfer money directly from a member's Canadian bank to an American bank at the best rate possible, without having to pay fees in the U.S.
Non-members can also use the program, for a $5 fee, Brissenden said.
Opening a bank account in the U.S. and having money transferred from your Canadian bank, or getting a U.S.-dollar Visa card -- which racks up purchases in U.S. dollars and is also paid off in that currency -- are two other options to circumvent fees, although those are likely to only be useful for people who regularly spend a lot of money in the U.S.
"If you want to do a lot of purchases in the States, aligning your currency holding with where you're going to be spending also makes a lot of sense,'' said TD deputy chief economist Craig Alexander.
Credit cards in general also have the advantages of being safe and convenient, offering loyalty points, fraud protection and warranties.
But "considering how high the currency will stay, you're unlikely to need one of these accounts to benefit,'' he said.
Alexander is forecasting the loonie to be at just above par by the end of 2008 and at 95 cents US in 2009.
"The main message for Canadians is: get used to the strong Canadian dollar,'' he said. "It's going to be with us for some time.''
