Originally Posted by v5v
Why does an iPhone cost MORE in Canada when the Canadian dollar is stronger than the US buck? That doesn't make sense. Especially that MUCH more! $50?! What gives?
The exchange rate between the US and Canadian dollars is very volatile. In the past year, it has flipped back and forth between both sides of parity several times, and it is reasonable to assume that it will continue to do so.
Retailers, on the other hand, strive to have prices that remain stable for the medium-term. They are (justifiably) not willing to assume too much risk in the event that the exchange rate goes too far south. So, they (understandably) build in a safety margin, to improve the chance that the price they set now will probably remain profitable until their next scheduled round of price adjustments a few months from now.
Don't forget, too, that currency exchanges are subject to entropy. Every conversion will likely be subject to brokerage fees of, say, 1.5% or so. Then, the remaining funds would be converted to the foreign currency at the prevailing exchange rate. Going from CAD to USD, and then immediately going from USD back to CAD again at the exact same exchange rate would always result in a net loss.
Say the exchange rate was 1.00, and you started out with $100 CAD. Your broker would take $1.50 up front, leaving you with only $98.50 for conversion at the applicable exchange rate. Your remaining $98.50 CAD would be converted into $98.50 USD, for an overall loss of $1.50. Apple may get more favorable brokerage fees - because they could probably aggregate many individual sales together into much larger overall conversion transactions - but the same principle would have to apply.