The Canadian dollar has dropped below the 70-cent US level for the first time since May 2003.

When stock markets closed on Tuesday, the loonie was changing hands at 70.13 cents US, down by about a fifth of a cent after earlier dipping below the 70-cent threshold for the first time since May 2003.

That means one U.S. dollar can purchase almost $1.43 Canadian.

The currency's historic low is 61.79 cents US — set in January 2002 — but it hit an all-time high of 110.3 cents U.S. in November 2007 as Canada's resource-heavy economy benefited from global demand for its exports.

The Canadian dollar was also dragged down by oil, which briefly dipped below $30 US a barrel for the first time since Jean Chrétien was prime minister.

The price of oil has now declined every single trading day of 2016.

CANADIAN DOLLAR: 10-YEAR NOON RATE

Much of the loonie's weakness is in comparison to the U.S. dollar and not necessarily against other currencies.

"The U.S. dollar becomes a refuge, and that's what we've seen in the last few days," said Patrick Leblond, an expert in finance at the University of Ottawa.

Stock indexes, meanwhile, staged a big rally to close out the day, with the Toronto Stock Exchange turning a 120-point loss at one point into a 54-point gain to close at 12,373.

The Dow Jones industrial average and broader S&P 500 were both up by about one per cent each on the day.

Despite the gains later in the day, the trading began amid a sour mood, summed up in a report from the Royal Bank of Scotland, which advised clients to "sell everything" in a report early Tuesday.

"This all looks similar to 2008," the bank's research economist Andrew Roberts said. "We dust off our old mantra: this is about return of capital, not return on capital."

With files from The Canadian Press