Canadian dollar closes at record low

The Canadian dollar plunged to an all-time low close Thursday, trading for a while below the 62-cent US level.

The loonie recovered slightly from that level to close at 62.13 cents US, still down 0.40 cents US on the day. It's never closed lower.

In early morning trading, the dollar dipped as low as 61.84 cents US.

Traders said the Canadian dollar hit its worst levels overnight because of technical trading in London England, with not much interest from buyers or sellers.

When the loonie opened on North American trading at 8:30 a.m. ET this morning, it stood at 62.01 cents, down 0.52 of a cent. The U.S. dollar then was worth $1.6126 CDN, up 1.33 cents.

BMO Nesbitt Burns economist Doug Porter said the dollar is feeling the effect of continued questions over the timing of the recovery in North America and around the world.

In addition, last Friday's gloomy unemployment report which said Canada's jobless rate in December rose a half of a percentage point to 8 per cent and investor disappointment that the Bank of Canada lowered interest rates this week by only one quarter of a percentage point were also weighing on the loonie, Porter said in an interview on CBC Newsworld Morning.

Porter said the market had been looking for a half percentage point cut in interest rates from the central bank.

"I think there is some sense that maybe the Bank is a little bit complacent, a little bit optimistic on the economy, especially given all the job cut announcements we've seen in recent days from places like Ford and today from British Columbia," he said.

Despite the dollar's dive, Porter believes the loonie will have to fall more dramatically for the Bank of Canada to step in to defend the currency.

"I think the Bank would have to be very desperate before it did anything such as raise interest rates or try to actually go out and buy Canadian dollars and sell U.S. dollars," he added.

Some economists see the dollar continuing to hover in its current range through the spring before beginning to recover.

In a forecast entitled "A Growthless Recovery", CIBC World Markets sees our dollar at 61.90 cents US in March before recovering to 63.7 cents US in June. By June, 2003, the dollar is expected to be back above 66 cents US.

Based on Bank of Canada official numbers, the dollar's all-time low close was 62.37 cents US on Nov. 9, 2001. The previous all-time intraday low was 62.30 cents US, a point hit on both Nov. 9 and Dec. 24 of last year.