Features
Do you want a challenge? Try opening a restaurant in Mexico – four different times in six years
By BERNIE BELLAN In December 2021 Myron Love wrote a story for The Jewish Post & News about former Winnipegger Megan Kravetsky.
How I happened to give Myron that particular assignment was an interesting story in itself. I had begun delivering Meals on Wheels for the Gwen Secter Centre in the summer of 2021 – which, if you can recall, was a period when we were still enduing periodic shutdowns due to Covid. As a result, the Gwen Secter Centre stepped up the number of meals that it began producing – not only for Jewish clients, but for hundreds of non-Jewish clients as well.
I wrote several times about the incredible effort that the staff at Gwen Secter put into producing what ultimately became over 600 meals a week, but that’s not the point of this story. This story is about food though, so there’s a connection.
In any event, beginning in the fall of 2021 I began delivering kosher meals for Gwen Secter on a weekly basis to a number of clients, some of whom some have remained on my list ever since.
One of those clients was a woman by the name of Joanne Field. Like most of my Meals on Wheels clients I developed a nice rapport with Joanne. One day she asked me if I’d be interested in doing a story about her granddaughter, whose name she told me, was Megan Kravetsky. According to Joanne, Megan had been operating a popular restaurant in Puerto Vallarta by the name of Blake’s Bar & Grill, and Joanne thought that readers of the paper who might be heading to Puerto Vallarta that winter would be interested in dropping into Blake’s.
As it turned out, I asked Myron Love to do that story instead of doing it myself because we were coming up to our Chanukah issue at the time and I didn’t have time to talk to Megan and write a story – but I did think that the Chanukah issue presented the perfect opportunity to let readers know about Megan and her restaurant.
That was in December 2021 and, even though my wife and I have been to the Puerto Vallarta area several times – and really love it there, what with Covid putting a crimp in travel plans for several years, it wasn’t until this year that I had the opportunity to head back to Puerto Vallarta. While I was there, I thought, I’d like to touch base with Megan and visit Blake’s myself.
Which is how I came to do a completely different type of story than I expected to write.
You see, Megan Kravetsky’s experiences in Mexico can fill a book – and a good part of that would be a horror story. Try this one on for size: Not only was her business badly affected by Covid in 2020 – just after she had moved into what was then the second location for Blake’s – after having moved from the first location because it was just too small – this past October, after having moved yet again into a different location for Blake’s in what Megan thought was going to be a great location – Hurricane Lidia swept through Puerto Vallarta and Blake’s was forced to close down.
Still, Megan persevered. She had opened another small pop-up restaurant last May called Drop Shot Chill n Grill in an area well known to many Winnipeggers who spend time in Puerto Vallarta, near what is known as the hotel zone. But, in another series of unfortunate circumstances, this time having to do with a very nasty landlady (who repeatedly cut off the electricity to Drop Shot), Megan was forced yet again to close down.
Read on and you’ll find out about the long string of unfortunate events that seem to have accompanied Megan ever since she decided to move to Mexico in 2018, but once you finish reading the story you’re bound to have an immense amount of admiration at how resilient Megan has proven to be.
Here’s some of what Myron wrote in his December 2021 story: “Three years ago, the veteran chef and restaurant consultant came across a deal she couldn’t refuse when she took advantage of an opportunity to buy Blake’s Restaurant and Bar, an established operation in Puerto Vallarta. Megan is now happily living year round in Mexico.
“Now, in truth, the former River Heights kid (Brock Corydon and Grant Park) was no stranger to the Mexican resort community. She notes that her parents, Charles (whose mother is Joanne Field) and Vivian Kravetsky, are long time seasonal residents of the city – spending six months a year there and six months in Winnipeg – and she had visited many times over the years.
“ ‘It was perfect timing,’ she says of her move to Puerto Vallarta.
“ ‘The first year was tough,’ she adds. ‘My Spanish was limited – which made it sometimes difficult to communicate with my staff. Now I am fluent.’
“Kravetsky notes that her original career goal was to become a lawyer (like her father). ‘After five years of university (the University of Manitoba), I realized that that was not what I wanted to do, she recalls.
“Instead, she earned a business degree in management and marketing and went to work in the restaurant industry. She had worked in the restaurant trade part time throughout university. Over the next 15 years, Kravetsky worked successively for the McDonalds chain, Moxie’s, the Olive Garden and Montana Steak House.”
Before I met with Megan on March 16 – at the location of the most recent incarnation of Blake’s Bar & Grill in the port area of Puerto Vallarta known as Puerto Magico, which is where passengers from cruise ships disembark, I had a chance to see for myself the damage that Hurricane Lidia had done to her restaurant. The interior was all covered with tarp, but I was able to see through a hole in the tarp. I was quite surprised to see that the restaurant itself was largely intact – tables and chairs all in place, dishes, utensils and cooking equipment all in place, but the windows to the outside were all blown out. That piqued my curiosity and became the subject of part of our conversation.
Still, as my wife Meachelle and I sat down with Megan to enjoy a beverage in a nearby coffee shop and listen to her story, I couldn’t help but be impressed by Megan’s very positive attitude. As it turns out, Megan had been in my son Jordy’s class at Brock Corydon School (of which I was not aware. Also, somewhat coincidentally, Jordy, who now goes by the name Jitendradas Loveslife, also lives in Mexico, in a town populated by New Age former hippies known as Ajijic.)
I asked Megan how she came to own a restaurant in Puerto Vallarta?
Megan explained that she had gone about as far as she could as a restaurant manger in Winnipeg. As Myron noted, Megan had worked for McDonald’s, Montana’s (helping to open their Kenaston location where she worked as a line cook), Moxie’s Bar & Grill, Olive Garden, also Famous Dave’s – all before she had even turned 30.
Megan had been traveling to Mexico with her parents and siblings for years, she told me, and fell in love with the country. So, in 2018, she took all the savings she had accumulated and bought Blake’s Bar & Grill in downtown Puerto Vallarta, which had first opened in 2006. Before she was able move to Mexico though, Megan had to acquire a residency permit – which was no easy task, she explained.
You see, in order to purchase a business in Mexico, one needs something called an “RFC” (which translates from the Spanish to Federal Taxpayers Number).
As Megan told us, “without that (the RFC) you can’t purchase cars, housing, anything. I got my residency before I moved down. You have to do your residency out of country.”
I asked her how she could become a Mexican resident while still in Canada?
She said, “You apply, you have to make a certain amount of money. So I applied three times – within a six month period. I went to Toronto twice. Applied. Denied. Both times. Went to Calgary” – and finally got her residency permit.
But, there’s something else Megan explained that made the challenge of buying Blake’s even more difficult: She wasn’t able to finance the purchase – she had to pay cash entirely – something, we were also told, is par for the course for just about any major purchase in Mexico, including houses.
But, just because Megan was able to buy Blake’s, she wasn’t able to work in her own restaurant, she told me, until she had a work permit. As she explained, “…so you get one year temporary residency, then you apply for a three year extension after that, and then after that, then you apply for your permanent residency. But temporary residency doesn’t include a work permit. That’s the biggest thing, so I had to apply for my work permit to be attached to my temporary residency.”
Megan, however, had forgotten to apply for a work permit – which she would have needed to work in her own restaurant. “But,” she explained, “then when my daughter was born (in 2019) – because she’s Mexican, I automatically became a permanent resident. So I didn’t have to wait for four years – I only waited two (to become a permanent resident)” – thus allowing her to work in her own restaurant.
Now, while Megan’s initial foray into the restaurant business was quite successful, the first Blake’s Bar was too small to accommodate the high number of customers it was attracting. As Megan put it, “the place was too small. It was a very small… very small restaurant.”
And then, in 2020, Covid hit. While Mexico had no sort of rules requiring masking in public places, it did institute rules governing social distancing – with a six feet distance required between tables. “We could only have two or three tables in at one time during high season,” Megan said.
So, in 2021, Megan moved to another location in Puerto Vallarta, in an area known as Plaza Santa Maria. Things were going really well in that new location. It had become a very popular spot for Canadians, especially Winnipeggers, as Megan made sure all Winnipeg Jets games were shown there. (Megan was in that location when Myron contacted her and she was brimming with confidence when she spoke to him about how well things were going.)
There was one major problem, however, as Megan explained: “The landowner there didn’t pay her taxes. So when you went to go take out your licensing, you have to show proof the taxes are. And if they’re not paid, then you can’t take out your licensing. And she owed back taxes of almost five years, which was over 300,000” (pesos – or about $22,000 Canadian dollars).
“And she didn’t want to pay it. So I had no choice,” Megan noted. As a result, after only one year in what had been a very successful location – even if only for a short while, Megan moved yet again, in 2022 – this time to the Puerto Magico location.
The owners of the building where Megan opened what by then had become the third location for Blake’s in only four years had induced her to move there with all sorts of promises, she said: “They had promised us numerous things that they never completed. The passport office was supposed to open upstairs two years ago. Still not open. Another restaurant was supposed to be up there. We were just alone up there. There’s nothing. They made it impossible for guests to get up the stairs. They wouldn’t fix the elevator. It still doesn’t work to this day. It’s been three years…and the whole thing with that is they don’t want to pay the electricity to have the elevator working.
“So they just made it impossible for the cruise ship people to get upstairs or any people in general to get upstairs.” On top of all that, the owners of Puerto Magico didn’t allow Megan to have any signage on the street which would have told tourists that Blake’s Bar was there.
Still, Megan might have been able to turn things around were it not for that hurricane last October. She had developed a great reputation as a restaurateur. (Just take a look at the glowing reviews on Tripadvisor for Blake’s Bar). In addition, Megan is a fantastic baker and she had opened a bakery known called Sweet Temptations Bakery Boutique next door to Blake’s in Puerto Magico. That closed too the same time as Blake’s when the hurricane hit.
You’d think, however, that notwithstanding the damage that a hurricane might have caused, it would just be a matter of time before things could have been repaired and Blake’s would have been back in business – but that wasn’t the case.
While the interior of the restaurant was left largely intact, the windows had all been blown out. So, it’s just a matter of replacing the windows – right? Or, so you’d think. But this is Mexico – and similar to the landlady who didn’t want to pay her taxes in Blake’s previous location, the owners of Puerto Magico haven’t moved to replace the windows that were blown out.
Here’s how Megan described what happened: “So, the whole thing here, after the hurricane hit, when you construct a building here, the windows and doors are property of the plaza. Doesn’t matter if you put them in, they put them in, it’s property of the plaza. You can’t leave with them. Yeah. Same with the floor. So when the hurricane came through and destroyed everything, the first thing they said to me is our insurance will cover it, our insurance is going to cover it, it’s our property.
“So we waited and waited and waited and waited and about two and a half to three months in, they said, nah, our insurance actually isn’t going to cover it. At that point, my own insurance wouldn’t cover it anymore. It has to be done within 24 hours. That’s just how it is.” (Note to readers: Anyone from Winnipeg could identify with Megan. A building burns down and a pile of rubble remains for years. A bridge closes because it’s unsafe and it sits there – unusable, but with no plan to replace it.)
Not one to let anything get her down though, Megan still had her pop-up restaurant, Drop Shot Chill n Grill. As I mentioned at the beginning of this story though, just recently that site too had to close down.
This time it was the landlady who owned the area where Drop Shot was located that forced Megan to close. While Megan leased the space for her location from an individual who didn’t actually own the land where Drop Shot was situated, he had tennis and pickleball courts there. Apparently though, the woman who actually owned the land didn’t like the loud music coming from Drop Shot – even though it wasn’t in a residential area at all.
Again, here’s how Megan described the situation: “In our contract it stated that I was allowed to have live music, barbecue, blah, blah, blah. The landowner who owns the land, who I don’t lease from, owns the hotel behind the parking where the tennis courts are. And she doesn’t like noise. She doesn’t like any noise. Yet, they have music and tennis tournaments and fairs and they have the food park and all that.
“So, during our live music, she would complain constantly, even though our music was only from 3 to 6 – that her guests, one guest in particular, couldn’t sleep – it was too loud. We always abided by the decibel restriction limit; it was never over the decibel limit.”
The story continued: “So she cut our electricity off once when we had the live music – but the second time she did it, I had a generator. She didn’t know that I had a generator going. So she had cut the electricity, but the music was still playing. So at that point she would call the ‘reglamentals’ – the bylaw officers, who would come check and she’d say, ‘There’s really loud music going on at Drop Shot.’ They would come, they would check, they’d check my permits, everything would be okay, they’d leave. That’s when I called the police on her. They’re my friends. They had a very long conversation with her… told her that it’s illegal to cut the electricity, she can’t do it.”
But, as you might expect, the landlady wasn’t about to back down. “It got to the point where she threatened the guy who I was subleasing from that if he didn’t get rid of me, she was going to get rid of everybody.
“She wouldn’t re sign the contract with him. So he’s had his tennis courts and pickleball courts there for over five years. And she said, ‘if I don’t leave, then everybody’s leaving.’ “
So, once again, Megan has had to abandon what had turned into a successful venture – but after dealing with Covid, a landlady who didn’t want to pay taxes, a hurricane, and a landlady who doesn’t like loud music, you’d have to wonder whether Megan is still willing to enter into yet another food venture?
Not surprisingly, she said she is. I asked her “How real is that? How feasible or viable?”
“Oh, it’s very viable,” she answered. “We’re just waiting on the contract to be signed.” Megan added that she has someone who she wouldn’t describe as a partner in her putative venture, but somebody “that’s going to help me.”
Throughout our conversation I had refrained from bringing up the subject that surely must be in the back of many a reader’s mind when it comes to thinking about doing business in Mexico: What about the cartels? Has Megan had any run-ins with the local cartel I wondered? (And when it comes to cartels, Puerto Vallarta is located in the state of Jalisco. Anyone who knows anything about Mexican cartels would know that the Jalisco cartel has a reputation for extreme violence.)
Megan answered though that “They’re not really that visible here… They keep it very under the table here.”
I said though that “the Jalisco cartel is notorious.”
But, Megan responded, “that’s more towards Sinaloa and Chihuahua.”
Still, given Mexico’s longstanding reputation for corruption at almost every level, I asked Megan, “Did you have to pay off people?”
She answered: No, never, never, never had to pay anybody off. You give back and then, you know, everybody takes care of each other.” She went on to describe the excellent rapport she has had with the local police, for whom she has catered a huge feast known as a “masada” every year, at which over 400 police have attended.
It’s hard to imagine someone coming down to Mexico and, within the space of only six years, opening restaurants (and closing them) in four different locations, yet still remaining optimistic that she’ll be able to open a fifth in short order.
If and when Megan does open another restaurant – I’d sure like to try the food. If the reviews she received on Tripadvisor for each of her locations are any indication, one thing Megan Kravetsky knows is how to prepare great food – and leave her customers with a thoroughly enjoyable experience.
Features
Bias in America’s Colleges Produced Modern Anti-Zionism
By HENRY SREBRNIK Jon A. Shields, Yuval Avnur, and Stephanie Muravchik, professors at the Claremont Colleges in California, have just completed a study, “Closed Classrooms? An Analysis of College Syllabi on Contentious Issues,” published July 10, 2025, that draws on a database of millions of college syllabi to explore how professors teach three of the most contentious topics: racial bias in the criminal justice system, the Israel-Palestine conflict, and the ethics of abortion.
They used a unique database of college syllabi collected by the “Open Syllabus Project” (OSP). The OSP has amassed millions of syllabi from around the world primarily by scraping them from university websites. They date as far back as 2008, though a majority are from the last ten years. Most of the data comes from universities in the United States, Britain, Canada, and Australia.
“Since all these issues sharply divide scholars, we wanted to know whether students were expected to read a wide or narrow range of perspectives on them. We wondered how well professors are introducing students to the moral and political controversies that divide intellectuals and roil our democracy. Not well, as it turns out.”
In the summary of their findings, “Professors Need to Diversify What They Teach,” they report that they found a total lack of ideological diversity. “Across each issue we found that the academic norm is to shield students from some of our most important disagreements.”
Teaching of Israel and Palestine is, perhaps no surprise, totally lopsided, and we’ve seen the consequences since October 7, 2023. Staunchly anti-Zionist texts — those that question the moral legitimacy of the Israeli state — are commonly assigned. Rashid Khalidi, the retired professor of Modern Arab Studies at Columbia, is the most popular author on this topic in the database. A Palestinian American and adviser to the Palestine Liberation Organization delegation in the 1990s, Khalidi places the blame on Israel for failing to resolve the conflict and sees the country’s existence as a consequence of settler-colonialism.
The problem is not the teaching of Khalidi itself, as some on the American right might insist. To the contrary, it is important for students to encounter voices like Khalidi’s. The problem is who he is usually taught with. Generally, Khalidi is taught with other critics of Israel, such as Charles D. Smith, Ilan Pappé, and James Gelvin.
Not only is Khalidi’s work rarely assigned alongside prominent critics, those critics seem to hardly get taught at all. They include Israel: A Concise History of a Nation Reborn by Daniel Gordis, a professor at Shalem College in Israel. Gordis’s book appears only 22 times in the syllabus database. Another example is the work of Efraim Karsh, a prominent historian. His widely cited classic, Fabricating Israeli History, appears just 24 times.
For most students, though, any exposure to the conflict begins and ends with Edward Said’s Orientalism, first published in 1978. Said is the intellectual godfather of so many of today’s scholars of the Middle East, thanks in no small part to this classic book. Said was a Palestinian-American academic, literary critic, and political activist from a prominent Christian family. Educated at Princeton and Harvard Universities, two of America’s most distinguished centres of higher learning, he taught at Columbia University, another Ivy League institution, until his death in 2003.
Said was no crude antisemite. His writings were aimed at academics and intellectuals and he has, in my opinion, done more damage to the Jewish people than anyone else after 1945. Said claimed to be the first scholar to “culturally and politically” identify “wholeheartedly with the Arabs.” But he was also a political activist for the Palestinian movement opposing the existence of Israel.
Said warned PLO leader Yasir Arafat that if the conflict remained local, they’d lose. Join “the universal political struggle against colonialism and imperialism,” with the Palestinians as freedom fighters paralleling “Vietnam, Algeria, Cuba, and black Africa,” he advised.
(In this he was not the first, though. Fayez Sayegh, a Syrian intellectual who departed for the United States and completed his Ph.D. at Georgetown University in 1949, preceded him. Also an academic, his 1965 monograph Zionist Colonialism in Palestine stands as the first intellectual articulation of Zionism as a settler colonial enterprise, arguing that the analytical frameworks applied to Vietnam and Algeria apply equally to Palestine. The treatise situated Zionism within European colonialism while presenting it as uniquely pernicious.)
Israel’s post–Six-Day War territorial expansion helped Said frame Israel as “an occupying power” in a 1979 manifesto titled The Question of Palestine. Alleging racial discrimination as the key motive was a means of transforming the “Zionist settler in Palestine” into an analogue of “white settlers in Africa.” That charge gained traction in a post-Sixties universe of civil rights, anti-imperialism, anti-colonialism, and Western self-abnegation. The work sought to turn the tables on the prevailing American understanding of Israel: It is not, in fact, an outpost of liberal democracy or refuge from antisemitism, but an instrument of white supremacy.
Orientalism popularized a framework through which today’s advocates on behalf of Palestinians understand their struggle against the state of Israel and the West generally. Said casts the Western world as the villains of history and peoples of the East as its noble victims.
The essence of the book, Said concluded, is the “ineradicable distinction between Western superiority and Oriental inferiority.” It falsely affirms “an absolute and systematic difference between the West, which is rational, developed, humane, superior, and the Orient, which is aberrant, undeveloped, inferior.”
So it was impossible to take Zionism seriously as one among the myriad nationalist movements that emerged in the nineteenth century, much less to see Israel itself as a land of refugees or the ancestral homeland of Jews. And, indeed, Said’s Orientalism singles out Israel for special rebuke, suggesting that the state could be justified only if one accepted the xenophobic ideology at the core of Western civilization. Israel’s defenders, particularly those who lament the lack of democracy in the Middle East and fault Arabs for their militancy, represent the “culmination of Orientalism.”
Said is widely acknowledged as the godfather of the emerging field of postcolonial studies, and his views have profoundly shaped the study of the Middle East. Said also inspired – and in some cases directly mentored – a generation of anti-Zionist U.S. scholars whose dominance in the academic study of the area is unquestionable today.
The political left that emerged trained itself to read every conflict as the aftershock of colonialism. The ideological narrative of oppression and resistance allowed even the jihadist to become a post-colonial rebel.
It’s hard to overstate the academic influence of Orientalism. The authors note that “As of this writing, it has been cited nearly 90 thousand times. It is also the 16th most assigned text in the OSP database, appearing in nearly 16 thousand courses.” Orientalism is among the most popular books assigned in the United States, showing up in nearly 4,000 courses in the syllabus database. Said’s work appears in 6,732 courses in U.S. colleges and universities.
But although it was a major source of controversy, both then and now, it is rarely assigned with any of the critics Said sparred with, like Bernard Lewis, Ian Buruma, or Samuel Huntington. Instead, it’s most often taught with books by fellow luminaries of the postmodern left, such as Frantz Fanon and Judith Butler.
All these ideas are now embedded into diversity, equity, and inclusion identity politics, and “humanitarian” outrage over supposed Israeli “settler-colonialism,” “genocide,” and “apartheid.”
The ground for the massive pro-Hamas college and university encampments, and attacks on Jewish students, was prepared decades ago. The long march of progressives through American institutions over the past decades has taken its toll on society.
Henry Srebrnik is a professor of political science at the University of Prince Edward Island.
Features
Exchange Rate Factors: What Global Events Mean for Savvy Investors
When Russia invaded Ukraine in 2022, it created ripples in all financial markets, including currency markets. The Euro weakened while the dollar surged and emerging market currencies wobbled. Global factors can quickly affect financial markets and shake established trends. Apart from such rare events, currencies tend to change their price because of interest rates, inflation, and overall investor confidence. For investors managing money abroad, understanding these movements is critical to avoid losses and mitigate risks.
Below, we will break down how global political, economic, and cultural events influence exchange rates, with insights for savvy investors.
Economic factors
There are several key exchange rate factors with a consistent history of shaking financial markets. These factors include inflation, interest rates, trade balances, employment rates, and so on. Since economic factors are shaping markets almost daily, we start with those.
Inflation and interest rates
Inflation and interest rates are closely connected as one can easily affect the other. When inflation rises, central banks step in and raise interest rates to reduce inflation, and when inflation is lower, central banks can lower interest rates to make borrowing money cheaper. As a result, investors closely monitor these two metrics to anticipate changes in interest rates. Higher inflation makes currencies weaker, and whenever banks change the rates, the changes are immediately reflected in global currency rates. In the United States, the Federal Reserve is the central bank that sets interest rates in the country.
Trade balances and economic growth
A country that exports more than it imports has a stronger demand for its currency. More demand equals a stronger currency. However, the Japanese yen was always weaker against the dollar because the BOJ of Japan tends to have super low rates near 0 to support its exporters. Economic growth also increases demand for local currency as more investors try to invest in the country’s economy. Long-term investors often track this data to detect early signs of any changes in currency strength.
Political and geopolitical factors
Elections, sanctions, and overall political stability are also crucial factors. If the country gets under sanctions, its economy crumbles and its currency becomes inflationary, losing its value quickly. Elections are also crucial for a currency’s strength. Geopolitical events can have a serious impact on the currency as well. The most obvious example is the 2016 Brexit events that made GBP lose its value rapidly and violently. Global conflicts, such as wars, can seriously impact global financial assets, especially currency markets. When tensions are high, safe-haven currencies like USD and CHF (Swiss Franc) become very popular among investors as they seek a safe place to protect their capital.
Cultural and social factors
People like tourists, workers, and diaspora communities can shape currencies as well. Tourism usually drives seasonal demand, and countries that are popular destinations during certain seasons experience their currency appreciation as demand spikes. The perception matters as countries seen as safe and opportunity-rich tend to attract more investors, solidifying their currency strength.
Technology and innovation
Technology is seriously affecting everything, especially the financial sector. Digital payment systems, blockchain technology, and fintech startups have made it easy and swift to move money around. Cryptos and stablecoins enable investors to protect their capital using stablecoins during volatile times. The latest trend among banks is to work on CBDCs, which signals a new era where national currencies are blended with technology and blockchain. Despite this, currencies, even in their crypto form, will continue to be influenced by all major factors mentioned above, and knowing how these factors impact your currency is key to keeping your capital safe from risks.
Practical lessons for savvy investors
So, what do all these factors teach us about global currency rates and investing strategies? The key lies in proper preparations and anticipation. Monitoring macro trends, policy announcements, and major geopolitical and political developments is critical.
Diversify
The number one method which is used by professional investors is diversification. This simply means to spread your risks across a basket of assets. By not investing all your capital in one instrument, you can mitigate risks. If one asset experiences a loss, other ones will counter it with returns. Building a diversified portfolio is key to properly diversifying. For example: divide your capital to buy stocks, commodities, currencies, and cryptos so that if one fails to perform, others will counter it. This ensures a stable income without unnecessary losses in the long run.
Hedge
Forex options and ETFs are great hedging assets. Forex options let investors lock in an exchange rate for a future date, which is very useful if you expect volatility but want stability. Currency ETFs, on the other hand, track specific currencies or a basket of currencies and allow easy trading or protection without trading forex directly, but they are still risky.
Monitor the economic calendar
Economic calendar is a free online tool that aggregates important macroeconomic news data such as interest rate decisions, CPI, inflation, employment rates, central bank announcements and speeches, and other crucial information. By monitoring them, investors can always know when important news data will be released, and they can postpone their investment decisions to avoid volatile times and only invest after the main trend is determined.
Features
The Canadian Dollar is on a slow decline. Should you save in euros or US dollars instead?
The Canadian dollar has been losing its value against the dollar this year. For Canadians, this raises a simple question: if your CAD is losing ground, is it better to move savings into euros or U.S. dollars, especially bonds, stocks, or a carry-trade strategy? Carry-trade strategy in this context means to borrow in CAD and invest it in the USA or the EU zone. This is a complex matter, and to understand where the CAD is, how attractive other currencies might be, we need to analyze these currencies more deeply. Below, we will walk you through the data, practical costs, and risks so you can reach a usable conclusion after reading this guide.
Quick snapshot – What the markets say right now
Recently, the Canadian dollar has hit multi-month lows due to weaker oil prices and a post-Fed (U.S. Federal Reserve) market reaction (which raised the rates, making the CAD weaker against the dollar). Canada’s central bank has cut its policy rate to 2.25%, while the Fed’s fund rate remains notably higher at about 3.75-4%. The ECB (European Central Bank) main interest rates are lower than the Fed’s and near the low-to-mid 2% range. While the Euro currency to USD rates remain mostly predictable, due to higher US bond yield rates, the EUR remains stronger, still. The U.S. 10-year Treasuries are around 4.1%, Canada’s 10-year near 3.2%, and Germany’s 10-year around 2.7%, meaning that today the USD-denominated bonds have the highest nominal yield among the three. As a result, the dollar seems much more attractive when it comes to bond yields and stocks.
Bonds – Which currency is the best for fixed income?
The short answer is: USD bonds. When it comes to nominal yield alone, US bonds beat almost all other competitors. U.S. government bond yields (10-year) are noticeably higher than Canadian and German/Eurozone bond yields right now. As a result, US bond buyers have more income potential than Canada and the EU. Euro-area core yields are lower, meaning they are paying less than the USA.
However, nominal yield does not mean it is guaranteed real return, and metrics like inflation, currency rates, and hedging costs can impact potential returns directly. If you buy USD bonds but the dollar falls against the CAD, currency losses will most likely wipe out the higher yield rate. If the Fed lowers its rates, it will make the dollar weaker against the CAD and EUR.
Another challenge is that, if you live and spend in Canada, you are using CAD, and when exchanging it for dollars, you get exposed to foreign currency rate risks, which must not be underestimated.
Stocks – Euro or dollar?
Both the EUR and USD have their advantages. USD has strong liquidity and strong long-term performance, while EUR equities offer valuation opportunities and recent relative strength.
Why USD?
The U.S. market remains the most liquid stock market with strong earnings for many tech and large companies. This makes USD stocks very attractive for long-term-oriented investors. S&P has been rising historically, and even after crashes, it often recovers its value relatively quickly.
Why EUR?
European indexes have performed well this year and in many cases cost less than their U.S. counterparts. While cheaper does not always mean better, these indexes still have some growth potential. Some major banks in the EU zone, together with industries, have recovered strongly with a recent focus on military manufacturing, making many EU stocks very attractive, together with local indexes.
However, here is a caveat: if you are using CAD daily and it loses its value against the euro, the returns from euro holdings might shrink, exposing you to greater currency risks.
Carry-trade analysis – Is it viable to borrow CAD and invest it in USD or EUR?
The basic promise of carry-trade is simple yet powerful: you borrow cheaper currency and invest it in currencies with higher yields. In our case, is it lucrative to borrow in CAD and invest in either EUR or USD? To answer this question, we need to look at numbers. BoC policy rate is 2.25%, Fed funds from 3.75%, U.S 10-yr is 4.1%, Canada 10-yr is 3.2%. If we deduct Canadian rates from the U.S. rates, we get around 1.8% positive before costs. So, in theory, it could be lucrative to invest CAD in USD assets using a carry trade. Since the ECB has around 2%, it is not profitable to use a carry-trade strategy for the euro.
The bottom line
While the CAD has been weakening lately, it is still not cheap enough to naively invest in USD or EUR. However, if you want a pure yield and can tolerate foreign exchange rate risks, USD bonds are more attractive today. When it comes to stocks, USD equities provide stable and liquid markets. If you want valuation potential and diversification, then euro equities have become more attractive this year. When it comes to carry-trade strategies, the USD remains more lucrative than the euro, but on paper, traders and investors should evaluate all the risks and costs before investing in any currency.
In the end, Canadians who have CAD for their daily costs should be careful when trying to get exposure to other markets. US bonds, US stocks, US carry-trade, and EU stocks remain attractive choices for experienced investors.