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Supercharged loonie takes flight Soaring Canadian dollar nears U.S. counterpart, luring shoppers as border ties become more complex

The Canadian dollar has soared to its highest value in 30 years, and experts predict it soon may be worth as much as its American cousin.

That's bad news for area residents who rely on the strong American dollar to lower the real cost of the Chinese food, theater tickets and ice wine they purchase in Ontario.

But it's great news for retailers in Erie and Niagara counties, because a robust Canadian dollar makes American goods more attractive to shoppers from Canada.

"As the Canadian dollar has gotten stronger, we have seen more Canadian shoppers visit Walden Galleria with more frequency," said James L. Soos, general manager of the the mall in Cheektowaga.

The Canadian dollar has risen as the relationships between residents and businesses on the two sides of the international border undergo fundamental changes.

More Canadians than ever are shopping at Walden Galleria and flying from Buffalo Niagara International Airport, also in Cheektowaga.

But fewer Americans are golfing at Legends on the Niagara and visiting the Mints Lounge, an adult-entertainment club.

The dollar "has an immediate psychological impact," but there's a number of reasons why Americans aren't visiting, said Chris Lansdale, general manager of Mints. "It's a list as long as my arm, and they've been accumulating since 9/1 1."

In addition to the newly muscular Canadian currency, rising gas prices and -- notably -- concerns over security restrictions at border crossings also are taking a toll.

"These things are all moving together," said Lawrence Southwick Jr., a University at Buffalo economist.

Visitors from Western New York long have counted on a favorable exchange rate as they spent their dollars in Canada.

On Jan. 21, 2002, the Canadian dollar -- known as the loonie because of the bird engraved on the back of the coin -- hit an all-time low of 62.02 cents, meaning an American dollar was worth $1.62 Canadian, according to Bank of Canada records.

The Canadian dollar was worth 94.22 cents Tuesday, meaning an American dollar was valued at $1.06 Canadian.

The Canadian dollar hasn't been this strong in 30 years, and it hasn't traded at par with the American dollar since 1976.

Experts say the thriving Canadian economy and higher prices for oil and other commodities that Canada exports are fueling the rise of the nation's dollar.

The Canadian Imperial Bank of Commerce is one of several banks predicting the currencies could reach equal value in the next 12 months, according to Bloomberg News.

UB's Southwick said that the stronger Canadian dollar is having a modest effect but that a number of factors drive the financial decisions made by consumers and companies.

Take the steady stream of Canadian shoppers who trek to the Fashion Outlets of Niagara Falls USA in the Town of Niagara, Walden Galleria and other retailers in Erie and Niagara counties.

Soos noted that 20 percent to 25 percent of vehicles parked at Walden Galleria on weekends this year have Ontario license plates, compared with 16 percent to 18 percent last year.

They say they are lured by the strong Canadian dollar, to be sure, but even more by consistently lower prices and better selection.

"We like Tops -- Tops and Target," said Loretta Del Duca, a Mississauga, Ont., resident who stopped by the outlet mall last week with her husband, Peter, after a visit to the Fallsview Casino in Niagara Falls, Ont. "Plus, for us, it's just a nice break away. You come, and you browse, and you buy things you don't need."

Melanie Nadin, who lives in Oakville, Ont., said she visits the Fashion Outlets a couple of times a year because of the variety and the lower prices.

The stronger Canadian dollar "encourages us to come here a little more," Nadin said.

Canadians choose to fly out of Buffalo Niagara International Airport because the price is reasonable and because getting in and out is easier than at Toronto Pearson International Airport, said Doug Hartmayer, Niagara Frontier Transportation Authority spokesman.

About 35 percent of the vehicles parking in the airport's long- and short-term lots are Canadian, Hartmayer said.

"As the Canadian dollar becomes stronger against the American dollar, giving our Canadian customers more buying power, hopefully we'll see even more Canadians using our airport going forward," he said.

Overall, 2.3 million Canadians visit this state each year and spend $544 million while they are here, according to the Web site of the Canadian Embassy in Washington, D.C.

The burgeoning Canadian dollar is a blow to American travelers, venues that cater to American tourists and any company that purchases goods from Canada.

Rich Products buys raw materials such as flour and palm kernel oil as well as finished baked goods from Canadian sources, said John Dougherty, the company's treasurer.

The stronger Canadian dollar makes those products more expensive. Rich Products tries to manage its risk through contracts that lock in a more attractive Canadian-U.S. exchange rate, Dougherty said.

The rising Canadian dollar is one piece in the decline in American travel to Ontario, said Jim Bradley, the province's tourism minister.

Visits by New York residents to Ontario fell 2 percent from 2003 to 2004 and another 12 percent from 2004 to 2005, to 5.9 million visitors that year, the most recent for which data is available, he said.

In 2002, 42 percent of players at the Legends on the Niagara and Whirlpool golf clubs in Niagara Falls, Ont., were American, said Brian Moore, director of golf operations for the Niagara Parks Commission. Today, the share of American golfers has fallen to 19 percent.

The dollar "is definitely a significant contributing factor, but it's not everything," Moore said, noting that several high-caliber public courses have opened in Western New York since 2002.

Even the "Canadian ballet" isn't immune from a drop in visitors.

At Mints Lounge in Niagara Falls, Ont., Americans still make up about 80 percent of the customers on weekends, but business overall is down in recent years, said Lansdale, the general manager.

In addition to the dollar, Lansdale blames the perception that crossing the border is more difficult and the feeling that Americans' disposable income has declined.

One key change is the soaring price of gasoline, which is prompting people to take fewer, or shorter, trips by car.

Some also say they sense that many Americans just aren't comfortable leaving this country during a time of war and as the threat of another terror attack looms.

Far more important than the rising Canadian dollar, everyone agrees, is the approaching requirement that Americans must have a passport to be allowed back into this country.

"I think we will see a gradual improvement [in cross-border travel], but as long as these factors are out there, it will be a slow recovery," said Bradley, the Ontario tourism minister.

e-mail: swatson@buffnews.com

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