Will the Canadian dollar slip below 70 cents US?
CBC
The Canadian dollar has slipped to its lowest level in five years. Outside of the depths of the COVID pandemic, the loonie is weaker than it's been since 2015.
And experts say there's every reason to think it will fall even more.
"I wouldn't be too shocked if we were to get below 70 cents [US] and even perhaps all the way down to 68 cents at some point," said Karl Schamotta, the chief market strategist of the financial payments company Corpay.
The Canadian dollar has been on a long, slow decline since the summer of 2021. But the decline has picked up steam this month as the U.S. dollar soared on news that Donald Trump had won re-election.
The American dollar gained ground on the currency of almost every industrialized country in the world as he has promised tax cuts, deregulation and sweeping tariffs on all U.S. imports.
About 75 per cent of all Canadian exports go to the U.S. which hasn't exactly injected confidence into the loonie.
"The market momentum is clearly against the Canadian dollar right now. And, you know, that market momentum does tend to build ahead of the inauguration date when new presidents take their office," said Schamotta.
A weakening dollar has sweeping effects on the Canadian economy. It means imports are more expensive. But it also means exporters who get paid in U.S. dollars bring in more money.
"We watch it like a hawk," said Paul Colborne, president and CEO of Surge Energy, based out of Calgary.
Surge pumps oil primarily in central Alberta and southern Saskatchewan. The company produces about 24,000 barrels of oil per day.
And currency fluctuations are crucial for the company's bottom line.
"For every penny that the dollar goes up or down affects annual cash flows [by] $7 million a year, so we watch it very closely," Colborne told CBC News.
Right now, the main North American benchmark crude sells for about $71 US per barrel. With the loonie trading around 70 cents US that means a hefty markup for companies like Surge.
"We sell our oil in U.S. dollars, and get U.S. dollars for them, and then convert them back. So today, Surge is getting about $97-$98 Canadian per barrel for our oil, which is a very attractive price," said Colborne.
