The Canadian dollar, also known as the loonie, sunk to its lowest exchange rate in five years, bottoming out at 87.88 cents to every US dollar. That was the smallest rate for the loonie since July 2009. By the end of the day on October 15 the loonie popped back a bit to 88.58 cents.
The Canadian dollar’s downfall is attributed to a market sell-off that is taking prices down for anything connected in any way with crude oil. Canada’s dollar was doing just fine until about a month ago when the price of oil began to head south. It was not long ago, only July, when the North American oil benchmark known as West Texas Intermediate, or WTI, was selling for $105 per barrel. Today the price has fallen down to $81/barrel, a shrinkage of 22 percent in just one quarter.
In recent times, at least as far as currencies go, “oil” and “Canada” are basically synonymous terms, and it’s the Canadian dollar which is bearing the brunt of the downturn.
“The weakness in oil prices is spilling over in a nasty fashion in Canada,” said Mark Chandler of RBC Dominion Securities. “The more oil prices fall, the more [the loonie will drop],” Jeremy Stretch at CIBC added.