Canada Dollar Falls to Four-Month Low

Canada's dollar declined to a more than four-month low on economic growth prospects as investors sold currencies from commodity exporting countries., Bloomberg 1/21/2008 8:50:57 AM

Canada's dollar was among 15 of the 16 most-traded currencies that declined against the U.S. dollar, with only Japan's yen rising, as plunging equity prices worldwide prompted investors to reduce risk and buy safer government bonds. Canada's main stock index, the Standard & Poor's/TSX Composite Index, fell 4.4 percent, the most in seven years, on concern the U.S. will lead a global economic slowdown.

The currency fell 0.5 percent to C$1.0324 at 11:18 a.m. in Toronto, from C$1.0272 on Jan. 18, reaching the lowest since Sept. 14.

Traders have sold the currency on speculation the Bank of Canada will lower borrowing costs for a second straight month tomorrow amid signs the U.S., destination for about 80 percent of Canada's exports, will slide into recession.

The Bank of Canada will cut its benchmark lending rate by 0.25 percentage point to 4 percent at its rate-setting meeting, according to all 22 economists surveyed by Bloomberg. The bank reduced the target 0.25 percentage-point in December, its first reduction since 2004.

Canada Dollar Falls to Four-Month Low