Canadian Dollar Falls to Lowest in a Week

The Canadian dollar declined to the lowest level in almost a week after the Bank of Canada cut its benchmark interest rate a half-percentage point to a two-year low., Bloomberg 4/22/2008 7:56:56 AM

Canada's dollar fell against all 16 most-actively traded currencies, depreciating 2.2 percent against South Africa's rand and 1.4 percent versus the British pound. Policy makers reduced the target rate to 3 percent, the fourth rate reduction since December to spur economic growth, matching the median forecast in a Bloomberg News survey of 32 economists.

The Bank of Canada's ``statement looks very dovish, pointing to lower rates going forward,'' said Stephen Malyon, co-head of currency strategy at Scotia Capital Inc. in Toronto. ``That puts some pressure on the Canadian dollar.''

The Canadian currency, nicknamed the loonie after the image of the bird on its one-dollar coin, fell 0.8 percent to C$1.0129 per U.S. dollar at 10:08 a.m. in Toronto, from C$1.0054 yesterday. It earlier touched C$1.0154, the lowest since April 16. One Canadian dollar buys 98.75 U.S. cents.

The Canadian dollar has declined 1.5 percent against its U.S. counterpart this year, paring a 17 percent gain in 2007. The loonie surged last year on the strength of soaring prices of commodities such as oil and gold, which account for half of Canada's exports.

The world's eighth-biggest economy will grow 1.4 percent this year, the bank said. That's the least since 1992 and slower than the bank's January forecast of 1.8 percent. Canada sends about three-quarters of its exports to the U.S., where weakening economic growth has sapped demand for Canadian lumber and cars.

Canadian Dollar Falls to Lowest in a Week