The Canadian dollar fell precipitously on Tuesday, losing more than a cent after the Bank of Canada revealed its decision to stand pat on interest rates.

Prior to the news that the central bank was going to keep its benchmark interest rate steady at one  per cent, the loonie was actually modestly higher, briefly breaking parity with the U.S. dollar at 100.07 cents US. It was the first time the loonie has been above the $1 US threshold since Sept. 20.

But within minutes of the bank's rate decision being announced, the dollar started falling. It closed down 1.29 to 98.40 cents US.

No rate change was expected in either direction, but investors were hoping for a more hawkish tone in the statement that comes along with the bank's rate decision.

The loonie tanked despite another factor working in its favour at the moment. After gaining $3 on Monday, the price of a barrel of oil moved $1.90 higher again on Tuesday, to $93.17 US.

TSX slips

Canada's economy is strongly linked to the oil market, and as such the loonie is often a proxy for the price of oil.

The Toronto Stock Exchange was slightly lower on Tuesday, down 0.43 per cent to 12,109.75.

Meanwhile, a weak earnings report from conglomerate 3M helped depress U.S. markets.

The Dow Jones industrial index fell 207 points to 11,706.62, the Nasdaq composite index dropped 61.02 points to 2,638.42 and the S&P 500 index declined 25.14 points to 1,229.05.

With files from The Canadian Press