Canadian Dollar Falls

Canada’s currency fell from a one- month high after crude oil dropped below $37, reinforcing speculation that currencies related to commodity prices may decline against their peers.

The Canadian dollar declined 1.2 percent to C$1.2061 per U.S. dollar at 4:39 p.m. in Toronto, from C$1.1915 yesterday. The currency touched C$1.1819, the strongest level since Nov. 10. One Canadian dollar buys 82.91 U.S. cents.

The loonie, as the currency is known, gained 3.5 percent over two days as the U.S. dollar tumbled after the Federal Reserve’s decision on Dec. 16 to cut its target lending rate to a range of zero and 0.25 percent. The Bank of Canada lowered its benchmark rate to 1.5 percent on Dec. 9.

Crude oil for January delivery declined as much as 10 percent to $35.98 a barrel. The largest component of the Bank of Canada’s Commodity Price Index rose in July to a record high of $147.27 a barrel.

Canada’s economy, the world’s eighth-largest, will contract in 2009 for the first time in 18 years, said Finance Minister Jim Flaherty yesterday. Gross domestic product will shrink by 0.4 percent next year as commodity prices plunge, he forecast., Bloomberg
12/18/2008 3:39:47 PM