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Income and Expenditure Accounts Technical Series
Estimates of Cross-border Shopping, 2006 to 2012
2. Canadian travellers and the exchange rate
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The relationship between the strength of the Canadian dollar and the volume of Canadian travellers to the United States is evolving. From the late 1980s to the early 2000s, travel to the United States and the exchange rate (USD/CAD) closely tracked each other. Chart 1 demonstrates that during these periods, trips to the United States, in particular same-day trips trended with the exchange rate. An appreciation of the Canadian dollar tended to coincide with an increase in the number of persons visiting the United States, while a depreciation in the currency had the opposite effect. However this relationship changed after the early 2000s as trips to the United States were not as responsive to movements in the exchange rate.
From 2006 to 2012, the annual number of same-day trips by Canadians to the United States has generally increased, notwithstanding the slight decline in 2008 (-0.7%) and the 13.9% decrease in 2009. In 2012, the number of Canadians taking same-day trips to the United States, by all modes of transportation, totalled 32.9 million, an increase of 36% from 2006. Similarly, the number of Canadian travellers visiting the United States on overnight trips trended upwards between 2006 and 2012, reaching 22.7 million in 2012.
Chart 2 plots the exchange rate against total, same-day and overnight Canadian travel to the United States. Prior to the 2008/2009 recession, when the Canadian dollar was high or appreciating in relation to the United States dollar, the number of Canadian visitors to the United States increased. In the last quarter of 2007, the Canadian dollar surpassed parity and Canadian visitors to the United States increased by 10.4% over the previous quarter, on a seasonally adjusted basis. Conversely, the depreciation of the Canadian dollar during the recession coincided with a decline in the number of Canadian travellers to the United States. The total number of Canadians travelling to the United States has trended upwards during the post-recession period between 2010 and 2012, as the Canadian dollar appreciated.
The relationship between the value of the Canadian dollar and the number of travellers is more apparent for same-day travel. Chart 2 illustrates that same-day trips to the United States track general movements in the exchange rate more so than overnight trips. This accords with the view that same-day trips are more often taken for the purpose of shopping.
It should be recognized that the volume of CBS, whether evaluated in terms of the volume of travellers or the monetary value of cross-border purchases, can be influenced by a range of factors, such as price differentials, changes in retailer landscape, duty-free limits, tax changes and economic conditions, in addition to movements in the exchange rate.
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