Edmonton Journal from Edmonton, Alberta, Canada • 55

BEST COPY AVAILABLE MarketsF3 EDITOR: Peter Collum, 429-5325 toon gee3 300 Jones But savers, exporters hurt by lower interest rates, rising dollar The issue: The dollar is recovering and interest rates are sliding, just what the doctor ordered for a still ailing economy. What's new: Not everyone benefits from a stronger dollar or even lower interest rates. What it means: Exporters could find it more difficult to compete internationally because of the stronger dollar while savers, particularly the elderly, will see their incomes eroded by falling interest rates. competitive in foreign markets or that the prices paid for Canadian goods is less. Meanwhile, the slide in rates can hurt some individuals particularly the elderly who are dependent on interest income and are not carrying a lot of debt For example, the drop in interest rates during the recession in 1992 eroded the average investment income of couples in which at least one was aged 55 or over by 15 per cent or several thousand dollars.

Still, on balance most individuals, corporations and governments will benefit from the stronger dollar and lower interest rates, analysts agree. Any pain for exporters from a stronger dollar will be eased by lower financing costs, while the lower rates will take some of the steam out of the currency. down 24.92 to 4,551.86 up 14.44 to 4,608.44 Canadian ill nnllar 74.59 cents US BANK RATE PRIME RATE New 8.00 TSE daily volume Dow daily volume 66320,000 314,440,000 TSE CLOSING INDEXES GoldfH down $383 (S512 US) downy 0.09i New 6.59 ERIC BEAUCHESNE South am News for The Journal Ottawa The dollar is rising and interest rates are falling, a welcome combination for most but not all Canadians. The Bank of Canada rate fell Tuesday for the fourth straight week to 659 per cent from 6.7 per cent last week, following a cut in prime rates this week to 8.0 per cent from 8.25 per cent Despite that the dollar hit 74.70 cents US Tuesday before closing at 74.59 cents US, just off its highest close of the year, reached Monday. That suggests even further interest rate cuts to come.

But savers and exporters may not be cheering. Evidence of the impact on exporters of a stronger currency Close Change Minerals 5046.89 Financial 3390.99 -2822 OM 442825 Industry 287623 -429 Utilities 330533 7.90 Consumer 802928 Merchandise 4185.41 Forest 4914.95 Transport 4634.31 -2233 Pipeline 3851.76 Management 5094.59 Communications 789732 2031 Golds 10655.15 -12932 Building 184330 OTHER CANADIAN MARKETS VSE index 83933 -038 VSE daily volume 19341338 ASEndex ASE daily volume 11301267 FOREIGN MARKETS Nikkei 18135.16 28737 Hong Kong 915239 72.50 London FT100 3502.6 -223 Frankfurt 2231.63 Australia 2124.3 -2-6 SAP 500 560.00 0.95 Silver 7.38 (5.51 US) -15 cents NYMex i i NYMex 0il iM Gas rVicev7 Price A unchanged at up 3.7 cents $17.82 US $1.69 US per barrel per MMBtu Oct delivery Oct delivery Trouble for Alberta's -exportersF2 was released Tuesday by Statistics Canada, which said prices for raw materials and industrial products some in U.S. dollars fell in July, undercut by the stronger dollar. "Excluding the impact of the surging dollar, producer prices would jpiM. The grass can grow six feet high.

You can get lost in it The seedlings dont have a chance." Allan Pusch, of Machine and Product Design Services growth of grasses that otherwise would kill the seedlings. "The grass takes the moisture and the nutrients, and blocks the sunlight" says Allan Pusch of Machine and Product Design Services, who also worked on the project "The grass can grow six feet high. You can get lost in it. The seedlings don't have a chance." Pusch says mounds offer another benefit mounded earth is a few degrees warmer than the surrounding soil, further helping the seedlings prosper. Forest companies create mounds with an excavator, which digs a bunch of holes on all sides in a somewhat random pattern that makes planting more difficult.

Or they use a double-edged plow to create rows of ditches. These are called lineal mounds, although environmentalists use stronger language to describe the unnatural result The Dual Path Mounder creates Calgary Herald Carl Zanon, left, and Allen Pusch of Calgary examine the prototype of their new 'green' machine which is to be shipped to northern Alberta later this week Sowing the seeds of growth New machine helps forestry firms replant after logging have risen 0.2 per cent" noted investment firm Nesbitt Burns. Meanwhile, prices for raw materials, many of which are also in U.S. dollars, fell for the third month. "If you're a big multinational exporter, a stronger dollar is not necessarily good news," said Nesbitt Burns economist Sherry Cooper.

It means that Canadian products are more expensive and thus less lAMMJiiJd it j. 7S.i two rows of spot mounds, in a consistent pattern, with each pass. Each mound is about 15 cm high, beside a shallow hole measuring about a metre across. Zanon said the 10-tonne machine, which is pulled by a Caterpillar tractor, will cover a hectare an hour, creating 1,200 to 1,400 mounds. It's much faster and lighter than alternative equipment cutting the cost of the mounding work.

The prototype Mounder, which existed only on paper last fall, was built at Qsine Corp. in the Foothills Industrial Park, Zanon says it was based on an idea by Tim Vinge, a Canadian Forest Products Ltd. systems management forester. Tests on the prototype will take the full cost to about $500,000, Zanon said. The tab is being picked up by Canfor, with Finning Ltd.

providing a test site and a Cat in Calgary. With the Calgary tests almost complete and the basic concept proven the Mounder will be shipped to northern Alberta late this week for field trials at a 350-hectare reforestation site in the Hines Creek area Mounding is done in the fall, with planting done the next spring, after the earth has settled. Loonie still below its purchasing power will depend mainly on foreign stock markets not on exchange rates. If you diversify among several foreign equity markets I suggest you ignore the currency outlook. If you load up on equities in a single country Japan, for instance you must consider the risk that the Canadian dollar may rise relative to that country's currency.

You also should consider the exchange-rate risk before buying foreign bonds. With worldwide interest rates converging in recent years, the performance differences between foreign-currency and isiinniiiaiii: ft Jt2 kJW--4- rc-HHtJ- Oil (Edmonton par price. Imperial Oil) (no change) $23.05 Natural Gas per gigajoule (AECO-C Hub spot price.Price Waternouse) 1 cent to $135 Complete stock listings, mutual tablesF3, F4, F5 Farcus by Dsvxj Waisglass Goroor Coultnart "Stwesh, I didnt do this much work when I had job!" WE MEAN BUSINESS! We wonf your business news. Whether it's an important new product, a big layoff, a promotion or a new company, we need to hear about it. Please fax us at 429-5500, call us at 429-5325 or write: Peter Collum, Business Editor, Edmonton Journal, P.O.

Box 2421, Edmonton, T5J 2S6. ONErAPujirMeMTB OFFICE I REGISTRATION I Massive playland planned for mall JAMES STEVENSON Journal Business Writer Edmonton Move those Swedish furnishings out and get ready to play West Edmonton Mall is preparing to fill Ikea's former mall space with a massive entertainment complex. Triple Five officials confirmed Tuesday that plans were nearly finalized to convert the former furniture store into a 13,500 sq. metre complex that would include restaurants, a bowling alley, billiard tables and arcade. Ikea announced in May that it would not renew its lease in the mall when it expired on Oct.

18. Instead, the Swedish furniture company opted to invest $16 million buying and renovating the former Eagle Hardware and Garden store on Calgary Trail and Whitemud Freeway. A Triple Five official said that demolition of the mall Ikea store will start soon after the company moves out in October. Deb Smith, manager for the new Ikea store, said the company is right on track to move into its new store on Oct 18. "The construction is just being completed now," she said.

The new Ikea store will be somewhat larger than the present mall location but will increase the selling space by 40 per cent by making the warehouse completely self-serve. As well, the new store will be contained on one level, said Smith. "In many ways it'll appear quite large." Although Ikea is currently depleting inventory at its West Edmonton Mall location, the company has no plans for a massive sale. "We're not closing down, we're just moving," said Smith. Ikea will likely close its mall store for good on Saturday, Oct.

14 and open the new store the following Wednesday, Oct 18. Attracting tenants to its large anchor-store locations has been of great concern to West Edmonton Mall for the past several years. The old Bretton's department store and Woodward's Food Floor has been vacant since 1992. And the mall has been trying hard to draw an American department store in to replace The Bay in the former Woodward's department store space. The Bay currently has two stores in the mall.

Canadian bonds will depend largely on shifts in foreign exchange. If you share my optimism about the Canadian dollar, then foreign-currency bonds are not attractive. Foreign bonds, or foreign bond funds, also incur extra commissions or annual management fees. Granted, many such funds are hedged into Canadian dollars to eliminate the currency risk but why not just buy Canadian bonds? RRSP Question: If I withdraw money from my RRSPs, how is it taxed? Answer The financial institution will withhold 10 per cent from withdrawals under or 20 per cent from withdrawals of $5,000 to or 30 per cent from withdrawals of $15,000 or more. You may minimize withholding by taking several withdrawals of less than $5,000.

At year-end, all RRSP withdrawals are reportable as income, and taxed accordingly. Amounts withheld may not equal your actual tax bill, depending on your tax bracket Questions about personal finance? Call Ron Chalmers, 429-5459. DAVE OBEE Calgary Herald Calgary They've come up with a better way to plant forests that costs less, is more efficient and is better for the environment It's based on a new machine, the Dual Path Mounder, that was developed in Calgary over the past few months at a cost of about $250,000. The machine was designed to help forestry companies plant new trees after they log northern areas. "They'll be able to plant two or three times faster than before," Carl Zanon of the Alberta Research Council says.

Zanon, project manager for the Mounder, says it is designed for reforestation projects in boreal forests the cold, wet areas found in northern Alberta, Saskatchewan and British Columbia. He says seedlings in boreal areas don't stand a chance unless they are planted in a mound basically, an extra layer of soil capped with minerals. The mounds are created by turning over the soil, which takes the minerals that were several centimetres down and leaves them on the surface. The mineral deposits limit the Ron Chalmers Money Matters power Suppose a hamburger cost $1.00 in Canada (those were the and 82 cents in the United States. Or suppose a "basket" of goods and services cost $100 in Canada, and $82 in the United States.

Then the Canadian dollar would have purchasing power of about 82 cents US. In fact the loonies purchasing power has ranged from 80 to 84 cents US over the past 15 years, while the exchange rate has bounced from 70 to 87 cents US. When the Canadian dollar fell sharply in the mid-80s, it eventually History shows loonie should have a strong future climbed back to its purchasing power. When it soared in the late "80s and early "90s, it eventually fell back to its purchasing power. Now the Canadian dollar again is far below its purchasing power but is recovering History and common sense both suggest it should rise further.

So I don't think you should be switching your wealth into U.S. dollars or other foreign currencies. But take a second look at the graph. In those last two incidents, the exchange rate remained out of whack for four or five years. So dont expect the Canadian dollar to achieve its purchasing power overnight Unless you're a gambler, dont speculate on leveraged currency options or futures contracts.

The currency 0Ui look might however, affect your attitude toward foreign investments. Your equity portfolio common shares held directly or in mutual funds should be internationally diversified, exposing you to foreign markets and foreign currencies. But the performance of those equities The Canadian dollar has climbed to 74.59 cents US but could go higher. Don't bet against it but don't speculate on a further surge. In January, our loonie dived to the bottom of the slough 70.20 cents for several reasons.

The Mexican peso crisis triggered a retreat from second-tier currencies; government debt caused a downgrading of Canada's credit rating; and Quebec's separatist spectre scared foreign investors. But Mexico survived; and Finance Minister Paul Martin's February budget restored some faith in Canada's fiscal position; and Quebec Premier Jacques Parizeau's separatist referendum has remained a mere rumor. The short-term crises have passed, the dollar has recovered and I think it could go higher. The current issue of Canadian Economic Observer, published by Statistics Canada, traces our dollar's historic ups and downs and concludes that its purchasing power is more stable than its exchange rate as seen in the graph. Here's hat I mean by purchasing.