Canadian dollar sinks below 90 cents US
The Canadian dollar continued its recent slide, trading Thursday below 90 cents US, its lowest level since July 2009.
The loonie traded as low as 89.50 overnight as foreign investors reacted to developments in Canada on Wednesday.
The Bank of Canada issued a very dovish policy statement in which it opted to keep interest rates where they are. Economists also interpreted the statement that accompanied that decision as a sign the bank is leaning toward lowering rates, not raising them, if and when it chooses to act.
We'll probably see the Canadian dollar get down to 85 cents.- Andrew Pyle
By mid-afternoon Thursday, the loonie had regained some ground, rising to 89.67 cents US. It closed the day at 90.06 cents US.
"I expect it to go lower," Scotiabank portfolio adviser Andrew Pyle told CBC on Wednesday, "We'll probably see the Canadian dollar get down to 85 cents against the U.S. dollar and that probably means we're not going to get any rate cuts in Canada."
The loonie has already lost more than four cents compared to the U.S. dollar in January.
That's welcome news to the manufacturing sector and other exporters because it makes Canadian goods cheaper for other countries to buy, which encourages sales.
But any Canadian citizens or businesses who have to pay for anything priced in U.S. dollars likely isn't welcoming the notion of a loonie priced well below its U.S counterpart.
"[If] you're an exporter of manufactured goods, you like that notion," Royal Bank's currency strategist, Mark Chandler, told CBC News. "[But] if you're planning a holiday in Florida or somewhere in the U.S., you don't like that notion."
Already there is news of surcharges on travel to the Caribbean, with tour operators like Sunwing Vacations, Air Canada Vacations and Transat planning to start charging an extra $27 per passenger at the end of the month for travel to sun destinations where their costs are in U.S. dollars.