The Canadian dollar hit its lowest value point in over two decades as it dipped below 68 cents USD before bouncing back to 69 cents.
Canada’s dollar has been volatile since the onset of the Trump administration’s 25 per-cent tariff threat last fall and its implementation on Saturday.
However it fell to its lowest value since 2003 on Monday morning.
The loonie traded as low as 67.6 cents USD during the beginning of Monday but began to climb back up marginally following the announcement that Canada would receive a one-month reprieve from U.S. tariffs.
The Canadian dollar increased by 1.4 per-cent to 68.55 cents USD Monday afternoon but was still down around 0.3 per-cent from Friday’s close.
The 30-day “pause” was implemented to allow for the two countries to continue ironing out their negotiations.
“Just because President Trump has hit pause on the tariff threat does not mean we’re out of the woods just yet – even though it brings us some much needed breathing room,” Montreal Economic Institute’s vice-president of communications Renaud Brossard told True North.
The overall trend of Canada’s currency has been a negative one since Trump’s election, dropping 5.25 per-cent since November.
Additionally, speculation over an all-out North American trade war continues to keep the currency in a hostile place.
“These tariff threats have highlighted how lengthy federal assessments for major energy, transportation and trade infrastructure projects have made us vulnerable,” said Renaud. “One of the first things a future federal government should do is completely overhaul the Impact Assessment Act so we can get those built again.”
Bank of Canada governor Tiff Macklem called U.S. tariffs a “major uncertainty” during a press conference last week to announce that the central bank would further cut rates by 25 basis points to 3 per-cent.
“You look out the window and the threat of tariffs is there. There’s no doubt that weighed on our decision,” said Macklem Friday. “The more we can get the economy on a solid footing before it faces new tariffs the better. From that risk management perspective, that reinforced the decision to cut the policy rate by 25 basis points.”
Economists with CIBC have projected the Canadian dollar to fall as low as 67.5 cents USD by the end of the week and may even drop to 66 cents should the trade dispute flare up again.
