Our capricious currency has “gone from a world-beater to a wallflower” in recent months despite skyrocketing commodity prices and a wilting U.S. greenback, a new report from the Bank of Montreal yesterday suggests.
After soaring to a modern-day high of $1.10 US last fall, the Canadian dollar now appears to be stuck below parity with its U.S. counterpart. It closed yesterday at 98.60 cents US but BMO predicts it will lose more traction in the months ahead, falling to about 95 cents in 2009.
The bank’s reasoning is multi-faceted but largely points to the credit crunch and the dearth of foreign takeovers of Canadian companies in recent months.
Other factors include steep interest rate cuts by the Bank of Canada and mounting fears U.S. economic woes will eventually spill into Canada. All this has led to a situation where the loonie has mostly idled below parity.