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Canadian Publishers - more trouble to come

$CDN & $US expected = 1:1

     
12:11 am on May 3, 2006 (gmt 0)

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Canadian economy is booming and Canadian dollar is at all time high, which is not good for Canadian Adsense publishers (this way we actually lose money). Today Canadian dollar rose above 90 cents! Bloomberg has reported that the Canadian dollar may face some resistance as it moves toward parity with the U.S. currency. I mean, the current exchange rate for Adsense publishers is bad enough - imagine what would happen if Canadian dollar continued to rise as it is steadily getting towards parity with the US dollar?

For every US $10,000 we would get CDN $10,000 and lose another CDN $1000 to CDN $1,500 that we were getting in the past with better exchange rate.

Strong Canadian dollar is - in my opinion - disaster for Canadian economy; hence disaster for Canadian Adsense publishers who earn living thanks to US online companies.

12:22 am on May 3, 2006 (gmt 0)

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I know, I wish adsense would let you deposit eft without exchange (in US funds that is) and let me decid when to sell it.
1:12 am on May 3, 2006 (gmt 0)

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Miedmark, maybe the best thing to do is to get payments in cheque and then hang on to them and see when the best time to cash them is (which varies from day to day) The banks usually give you .02 cents on average less than what the actual exchange rate is. There might still be some fluctuation, but most economists are predicting that the dollar will be 1:1 by mid-2007. Canadian commodities like oil, gold and nickel are what's doing this, plus, the US trade deficit is limiting USD gains on the CDN dollar. The (conservative) CDN fed budget came out today too, so this could cause some spikes too for a while.

Another option is to get the payments in USD into a US account in a Canadian bank. Then, whenever the CDN dollar falls for a day or so, transfer the $ to your CDN account.

1:14 am on May 3, 2006 (gmt 0)

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maxgoldie - that would work for a while. Checks do expire. Thanks for the hint though.
1:15 am on May 3, 2006 (gmt 0)

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Another option is to get the payments in USD into a US account in a Canadian bank.

Wait a minute, now that will work. Cheques are sent in US funds.

1:44 am on May 3, 2006 (gmt 0)

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When I was young, the Canadian dollar was worth more than the American dollar.

I understand your concern, though. I live in the U.S. but earn a good deal of my income in euros, and if the euro were to drop back to the levels of 2000 and 2001, I'd be hurting.

1:54 am on May 3, 2006 (gmt 0)

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Checks do expire

Actually, Google's cheques have a lifespan of 6 months from date of issue, so there is a bit of lee-way.
2:31 am on May 3, 2006 (gmt 0)

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I was thinking, maybe it would be wise to get checks in USD funds, and then keep US $ funds for a year or two hopping that Canadian dollar will fall sharply, and then sell and make 20-30% profit.

Does this sound plausible?

Or, given the current sharp CDN $ growth, maybe the future is still bleak? Will CDN economy stay this strong for years to come or what? Can anybody give predictions? I don't feel comfortable with this exchange rate. I am expecting a big check next month, and given the fact that CDN $ is the highest since 1978, I will lose lots of money... I might switch to check, but then I would lose interest... honestly, this is ridicoulous.

2:33 am on May 3, 2006 (gmt 0)

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PS: If I keep US funds in my banking account, the interest rate is almost non-existent. But If I keep the funds for a year or two, there is no guarantee that better exchange rate would come. In the meantime, I would lose interest, around 4% per year... I am on EFT now, but might switch to check, I don't know; strong CDN dollar is simply not good for our economy.
3:00 am on May 3, 2006 (gmt 0)

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I was thinking, maybe it would be wise to get checks in USD funds, and then keep US $ funds for a year or two hopping that Canadian dollar will fall sharply, and then sell and make 20-30% profit.

Does this sound plausible?


That would be a good idea, unless you need the money right away.
3:17 am on May 3, 2006 (gmt 0)

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Toldan:

No, a high Canadian dollar is DEFINITELY here to stay longer than that. We've got oil, and other natural resources which are really spiking our economy. And thanks to the war in Iraq and other US spending, they are in absolutely incredible debt right now, truly scary stuff. Pretty much our economy has to tank before our dollar will drop against the "US Peso" as some wags have been calling it. And there's nothing in the immediate future that can cause that.

(On the upside, my Energy Funds RRSP and Precious Metal's funds are kicking ass.)

I'm basically preparing for a CDN - US dollar parity in my future plans. Sucks, given how low the dollar was just 2 years back when we started all this. But that's how it is.

I still can't believe a *Republican* gov't caused all this US debt. And although I wasn't crazy about it, I think our Conservative gov't actually came out with a budget that will be good for our economy - and hence bad for us.

But look to take advantage of it if you can - hire out US employees, as they are cheaper than ever and there's 10x of them. Same with other US services and software!

3:57 am on May 3, 2006 (gmt 0)

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I am prepared for further deterioration on the exchange rate front.

The U.S. has now become far and away the largest debtor nation in the world and is fully dependent on foreigners to fund its huge trade and fiscal deficits. This process is placing huge pressure on the American dollar. The mismanagement of the economy by the current administration has been well documented.

On the other hand, the Canadian economy is in very good shape at the moment. The federal government and virtually every provincial government is running a surplus. I know that Alberta is running almost a $10 billion dollar annual surplus. We are experiencing a commodities export boom of major proportions, and it seems unlikely that it will end anytime soon. The worst danger would be if the U.S. economy collapses.

At any rate, there does not seem to be anything in the cards to suggest that the Canadian dollar is going to fall in value. I am preparing for the possibility that the Canadian dollar will approach parity with the U.S. dollar. As Canadian publishers, there is really very little we can do about it. Most of our living costs and expenses must be paid for in Canadian dollars.

4:46 am on May 3, 2006 (gmt 0)

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Most of our living costs and expenses must be paid for in Canadian dollars

Unless you get USD cheques and put them into a US account, and then withdraw the money and pay for goods and services in USD. Merchants will still give you approximately 2 cents more then the banks will. The banks always gouge 2 cents off the top just to convert the $ for you.

The only thing that could cause the CDN dollar to waiver is if there is a failing of the government in the next while. But it hardly looks like the opposition has the war chest for another election soon.

I'm basically preparing for a CDN - US dollar parity in my future plans.

Wise thing to do! The 2008 US elections are still so far away, and the CDN economy is a juggernaut now.
6:50 am on May 3, 2006 (gmt 0)

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Toldan, the USD to CAD rate is a luxury issue;-)
My Adsense account shows USD but Adsense pays me in Euro. And since its introduction the Euro has risen sharply. So if my Adsense account shows $ 100,- I get paid Euro 79,-. And don't think my Euro buys me more than your Canadian dollar. How about one liter of gaz for Euro 1,40! To put that in perspective:
One gallon of gaz for no less than 7,8 Canadian Dollar! Even Adsense can't solve that problem.
7:00 am on May 3, 2006 (gmt 0)

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It is a real pain. Works out to some really big numbers when cashing cheques. Once the CDN dollar goes over $1.10 or so in the next 2 years imagine all the US companies targetting canada for earnings growth.. On the web and offline.
7:55 am on May 3, 2006 (gmt 0)

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A bit off topic, but did anyone else get a notice in adsense saying their payment is on hold? I logged in this morning to see that I had to verify my bank account again for EFT. No clue as to why, but until it is verified (again) the payment for last week's screw up is on hold.
9:14 am on May 3, 2006 (gmt 0)

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Matt, have a look at
[webmasterworld.com...]
10:18 am on May 3, 2006 (gmt 0)

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Thanks for that, I missed that thread.
10:29 am on May 3, 2006 (gmt 0)

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you could put payments on hold if you don't need the money every month
4:47 pm on May 3, 2006 (gmt 0)

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Max:

Interestingly enough, the Google straight to the bank EFT gives us a better transfer rate than we got putting the cheques in the bank. I don't understand the magic behind that but I don't complain.

Good point about the gov't being weak... but really, for all their bluster the Liberals don't stand a hope in heck right now of toppling the gov't, they'd get killed if we had another election campaign and the game would be up for them for at least 5 years. So I think out gov't will be strong for at least a year and half - in a year they'll have a leader and then it will take at least six months to get his/her feet wet and judge the public opinion.

Even if the gov't "falls" in that time, I don't see the dollar drop that significantly if the economy continues to boom. Does anyone else here?

7:32 pm on May 3, 2006 (gmt 0)

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[quote[Good point about the gov't being weak... but really, for all their bluster the Liberals don't stand a hope in heck right now of toppling the gov't, they'd get killed if we had another election campaign and the game would be up for them for at least 5 years. [/quote]

As an all time Liberal, I am sick of both Liberals and Conservatives. We need a third system that will be fair and balanced to all. The budget is good, but not great (for example additional $450 million given to Natives is a waste of money. They already have 6-8 billion dollars that we gave them, and they are still unemployed and complaining; none of their problems seem to be solved + they don't pay taxes). When it comes to Google and Adsense - they can do nothing about CDN/US exchange rates; they can't control it. Canadian economy is trully a world superpower now, it's rising sharply and there is no sight of slow down in the near future. This is hurting Canadian publishers who do business with the US. If you ask me, I would rather be paid $150 CDN for ever $100 US, than $110 CDN for every $100 US. If CAD $ gets to parity with US $, then we are really screwed; we will be losing tons of money. But again, best thing to do is: No Complaining.

8:38 pm on May 3, 2006 (gmt 0)

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I have a dumb question in all of this: would there be any advantage (or would it be possible) for a CDN publisher to get paid in Euros?

(Maybe the CDN dollar can keep better parity with the EU than the USD.)

10:44 pm on May 3, 2006 (gmt 0)

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hi maxgoldie,

great question.

Maybe we could, why not? However, I have no faith in European Union. They do business differently over there.

Maybe it would be better for US and Canada to have 1 currency; North American currency?

Let's call it AMERO.

What do you think?

10:50 pm on May 3, 2006 (gmt 0)

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Wouldn't you simply get paid the same amount anyways, except denominated in Euros? I don't see the benefit.

As for the risk in general, I guess you would be more protected from currency fluctuations and economic downturns if your site had a truly international focus. That's not to say you would necessarily earn MORE overall, but having lots of visitors and lots of advertisers from all over the world would smooth out many of the daily/seasonal/regional peaks and valleys.

11:00 pm on May 3, 2006 (gmt 0)

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I have a US dollar account with a Canadian bank, and also a charge card in US dollars. Most of my business expenses US-based so they go on that card, then I just pay the monthly bill out of the US account. The majority of my business activity is shielded from currency fluctuations that way.

I still cry the blues when it's time to pay myself, though. It's not nearly as much fun to exchange US dollars as it was two or three years ago.

11:14 pm on May 3, 2006 (gmt 0)

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As for the risk in general, I guess you would be more protected from currency fluctuations and economic downturns if your site had a truly international focus. That's not to say you would necessarily earn MORE overall, but having lots of visitors and lots of advertisers from all over the world would smooth out many of the daily/seasonal/regional peaks and valleys.

My site has a trully international focus. The topic of my site is foreign exchange (currency exchange) and day trading. People all over the world do it; it has trully international appeal.

11:20 pm on May 3, 2006 (gmt 0)

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You could offset the rise in the Canadian dollar a little by investing in gold and oil which is expected to continue the upward trend.

Back in 2001 the Canadian dollar hit alltime lows at 62 cents. $1000 U.S was $1600 Canadian.

Guess we won't be seeing that for some time.

 

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