Currency is down 17% year-to-date against the U.S. currency
The Canadian dollar hasn’t been at par with the U.S. dollar for three years. This year, the loonie’s slide against the American dollar was one of the biggest ever. (Mark Blinch/Reuters)
Assuming that the loonie stays at current levels (and that may be a reckless assumption given the steady slide we’ve seen of late) our dollar is on track to record its second-worst year ever, according to calculations from BMO Capital Markets, with a drop of 17 per cent since the start of the year.
- Canadian dollar tumbles to close below 72 cents US
- U.S. Federal Reserve hikes interest rates for 1st time since 2006
That would be second only to 2008’s drop of 18.6 per cent, when the financial crisis was gripping much of the industrialized world.
Economists at the National Bank of Canada put it this way in a currency outlook this month: “This year is one to forget for holders of the Canadian dollar.”
To put this slide into perspective, of course, it’s necessary to go back more than one year. Remember when the dollar was on par with its American counterpart? It wasn’t that long ago. The two currencies were at par as recently as December 2012.
Today, it costs at least $1.40 to buy a greenback that could be swapped one-for-one with our loonie three years ago.
Experts cite several main reasons for the slide since then:
- Slumping oil prices. With oil plunging to around $35 US a barrel (it was around $60 US at the start of the year and more than $100 US in the middle of last year), the hit to our currency has been huge. Canada is a large exporter of oil, which is priced in U.S. dollars. Prices of gold, copper and coal, which Canada also exports in abundance, are also slumping.
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