Canada's Dollar, Pound Weaken

Canada's currency dropped for a third day against U.S. dollar, as oil fell to the lowest in 22 months. The pound dropped to a record low against the euro and breached $1.50 for the first time since 2002 after the Bank of England indicated it will keep reducing interest rates as the economy slumps.

Canada's dollar, has weakened 14 percent this quarter, during which time crude has plunged 44 percent. Oil accounted for a tenth of Canada's export revenue last year.

The Canadian currency fell as much as 2.3 percent to C$1.2363 versus the U.S. dollar, the lowest since Oct. 31, from C$1.2073 yesterday. It traded at C$1.2342 at 2:43 p.m. in Toronto. One Canadian dollar buys 81.02 U.S. cents. The currency declined during four days in the period ended Oct. 22.

Crude for December delivery touched $55.94 a barrel in electronic trading on the New York Mercantile Exchange, the lowest since Jan. 31, 2007. Prices have tumbled 62 percent since reaching a record $147.27 on July 11.

The pound also fell versus the Japanese yen and Swiss franc after the central bank said the economy will shrink through most of next year and inflation will slow ``well below'' the 2 percent target. A government report today showed unemployment claims rose to the highest level since March 2001, adding to evidence the economy is deteriorating. The pound traded above $2 as recently as Aug. 23.

The pound traded as low as 84.12 pence per euro, the weakest since the single currency's introduction in 1999, and was at 83.49 by 5:50 p.m. in London. It fell to $1.4966, the lowest since June 2002, before trading at $1.5033.

Britain's currency slipped as much as 6 percent versus the yen, the biggest drop since Oct. 27, and was at 143.30 yen, from 150.24 yen yesterday. It dropped a third day versus the Swiss franc, to 1.7714 franc.

The U.K. currency declined 25 percent against the dollar and 12 percent versus the euro this year as the fallout from the global credit crisis batters Europe's second-largest economy., Bloomberg
11/12/2008 12:43:44 PM