Keeping an eye on currency exchange rates are crucial if you have to head into Canada and want to save money or stay with a set budget. One decision you might have to make is whether or not to do currency exchange in Canada or do it before you enter the country. The Canadian dollar isn’t really used anywhere else in the world, so your local cash from back home won’t be of too much use here. The one exception is perhaps American currency that might be accepted in stores or restaurants close the border with the southern neighbor, but it can be dicey. Otherwise, you either need to bring Canadian currency in or get currency exchange in Canada done at an airport or bank. The exception of course if you use debit or credit cards, which are all electronic anyway.
Depending on where you come into Canada from, your currency might be either pegged or free floating. A pegged currency is a situation where a government of a nation decides that its currency will be determined relative to another nation’s currency. For instance, many countries, like the Bahamas, peg their own currency to the American dollar so there is equal value. Free-floating currencies, on the other hand, are permitted to have changes in value respective to all the other currencies available across the foreign exchange market. In terms of currency, you might also hear terms like real exchange rates and nominal exchange rates. Actual exchange rates are rates for products of one country being traded for services and products in another country. A nominal exchange rate will be of more interest to you because it’s the rate or value at which currencies between two countries are traded.
If you have any flexibility in the timing of your trip to Canada, you might want to look for seasonal variations in the exchange rates. Sometimes of the year might be cheaper than others. For instance, even though Vancouver might always be flooded with tourists and visitors, finding hordes of tourists from Japan might be in different months than those from Europe.
Of course, your flexibility in timing might depend on the scope of your trip and where you are coming from. If you live near the border in the United States, a weekend trip into Canada could be very spontaneous, but if you’re flying in from another continent or somewhere else far away, you might not have as much luck or latitude in waiting for good currency rates.
Of course, you don’t always have to do currency exchange when you’re in Canada. You might be able to go to your local bank at home on a day exchange rates are good and pick up Canadian cash in advance of your trip and then take it with you when you do go.
Wherever you change your currency, always keep an eye on the conversion rates. Most places charge a fee for currency exchange. If you’re doing more rather than less, flat fees are certainly preferable to percentages.