Canada’s dollar weakened past C$1.20 per greenback for the first time since April 2009 on concern a continued slump in crude oil, the nation’s biggest export, will damp economic growth.
The currency has lost 2.8% this year against its U.S. counterpart as speculation a global oversupply of crude that’s already cut the commodity’s price by more than half since June will drive it down further. Government bonds climbed. Bank of Canada Governor Stephen Poloz, who will release new economic forecasts next week, said in December the slide in oil will cut about a third of a percentage point from growth this year.
“It’s all about crude,” Jack Spitz, managing director of foreign exchange at National Bank of Canada, said by phone from Toronto. “A reduction in crude-oil prices will stagnate growth in oil-producing provinces such as Alberta, Newfoundland and likely Saskatchewan. That hits the Canadian economy and the Canadian dollar.”
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, depreciated as much as 0.5% to C$1.2017 per U.S. dollar before being at C$1.1945 at 9:03 a.m. Toronto time.
Canadian 10-year bond yields dropped to a record-low 1.516% as prices rose.
The North American benchmark for crude oil fell to $44.20 a barrel in New York yesterday, a 5 1/2 year low, before trading at $45.80 today. The 2014 high was $107.73 in June.