BLBG: Canada's Dollar Falls to Lowest Since May 2007 on U.S. Strength
By Chris Fournier
Oct. 6 (Bloomberg) -- Canada's currency weakened to the lowest since May 2007 after the U.S. dollar strengthened against most major currencies as the credit crisis spread and crude oil fell below $90 a barrel for the first time since February.
Canada's dollar fell for a third day, its longest losing streak in more than a month. Canada relies on commodities for about half its export revenue. Crude accounts for 21 percent of the weighting in the Bank of Canada Commodity Price Index, the largest single component.
``We're seeing most of the commodities-based currencies getting hit,'' said Sal Guatieri, senior economist at BMO Capital Markets in Toronto. ``It's more of a story of U.S. dollar strength on strong safe-haven buying of U.S. Treasuries as opposed to a commodity-price story.''
The Canadian dollar dropped as much as 0.9 percent to C$1.0924 per U.S. dollar, from C$1.0827 on Oct. 3, the lowest since May 18, 2007, when it touched C$1.1001. It traded at C$1.0877 at 8:58 a.m. in Toronto. The currency fell during four straight days in the period ended Sept. 2. One Canadian dollar buys 91.94 U.S. cents.
The loonie, as Canada's currency is known because of the aquatic bird on the one-dollar coin, will slip to C$1.13 against the U.S. dollar by the end of 2009, according to the median forecast in a Bloomberg News survey of economists.
Guatieri predicts the loonie will stabilize against the U.S. dollar at C$1.08 by the end of this year and then weaken to C$1.12 by the end of 2009.
Oil dropped as much as 5.3 percent to $88.89. Crude for November delivery last traded at $90.08.
The loonie extended declines after Statistics Canada said building permits plunged 13.5 percent in August, almost 10 times as much as expected. Economists surveyed by Bloomberg News forecast a 1.5 percent drop, the median of 13 estimates.
To contact the reporter on this story: Chris Fournier in Montreal at email@example.com