Canadian Dollar Drops to Lowest Level Since 2004

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The Canadian dollar dropped to levels not seen since 2004 the past Wednesday.

On Wednesday, the loonie shed nearly 0.53 cents to close at 76.70 cents against the U.S. dollar, which is the lower than the 76.85 cents the loonie closed at on March 9, 2009. The last time the dollar has dropped this low was in September 2004 when it hit the 75 cent mark.

The falling loonie has been attributed to the decline in oil prices over the last year. Corresponding with the loonie, the price of a barrel of oil dropped to $50 US Wednesday, continuing its fall from a high of over $100 a barrel in summer 2014.

The decision by the Bank of Canada last week to cut its key interest rate has also hastened this decline. “The Bank of Canada rate cut dealt a severe blow to the Canadian dollar and its outlook,” Rahim Madhavji, analyst at Knightsbridge Foreign Exchange, said.

Currently, the central bank is forecasting oil to average $60 a barrel for the rest of the year, but we are currently $10 below that, so experts are expecting the loonie to fall even more.

When the Canadian dollar last dropped, the US economy was in a recession as well, but this time around the dollar is dropping while the US economy is doing fairly well.

The Canadian Dollar has fallen 17.4 per cent since this time last year.


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