Canada's Dollar Falls Most Since 1985

Canada's dollar plummeted the most in more than two decades this week as investors shunned commodities on concern that a slowing U.S. economy will curb global demand for energy, metals and grains., Bloomberg 3/21/2008 6:41:50 AM

The currency dropped 3.3 percent, the steepest since 1985, as commodities slumped. Gold declined 11 percent from a record earlier in the week, and copper posted its biggest weekly decline in 10 months. Crude oil fell more than $13, going below $100 a barrel for the first time since March 5. Commodities account for about half of Canada's exports. The oil sands in Alberta contain the largest crude deposits outside the Middle East.

The Canadian currency dropped to C$1.0231 per U.S. dollar in Toronto from 98.93 cents the previous week. It touched C$1.0295 on March 20, the lowest since Jan. 23. One Canadian dollar buys 97.73 U.S. cents.

Canada's currency, nicknamed the loonie after the image of the bird on its one-dollar coin, surged 17 percent last year on the strength of soaring commodity prices. The gains spurred speculation that the economy was becoming less dependent on the U.S., the nation's largest trading partner, as demand climbed for exports to nations such as China and India.

This year has been marked by signs in government reports that Canada's economy, the world's eighth-largest, is faltering as the slump in the U.S. broadens.

The loonie extended its losses March 20 after a report showed Canada's index of leading economic indicators unexpectedly fell 0.3 percent in February, as manufacturers continued to struggle and the housing market weakened. Economists had forecast a 0.1 percent rise, according to the median of 16 estimates in a Bloomberg News survey.