By Allison Bennett and Chris Fournier Jan. 19 (Bloomberg) -- Canada’s dollar depreciated from almost a three-month high as the nation’s central bank reiterated that the currency’s “persistent strength” hampers an economic recovery. The Bank of Canada kept the overnight lending rate at a record low 0.25 percent, as forecast by all 26 economists in a Bloomberg News survey. The U.S. currency rose against most of its major counterparts. “Some people have been perhaps looking for some sign that rates may be moving up sooner than the pre-commitment date,” said Shaun Osborne, Toronto-based chief currency strategist at Toronto-Dominion Bank, the nation’s second-biggest lender. “That’s obviously shut down with this statement.” The Canadian currency, nicknamed the loonie, weakened 0.4 percent to C$1.0306 per U.S. dollar at 4:34 p.m. in Toronto, from C$1.0261 yesterday. It appreciated to C$1.0225 on Jan. 14, the strongest level since Oct. 15. One Canadian dollar buys 97.03 U.S. cents. Government bonds were little changed, with yields on Canada’s 10-year security rising one basis point, or 0.01 percentage point, to 3.48 percent. The price of the 3.75 percent note due in June 2019 decreased 6 cents to C$102.15. The loonie trimmed its decline as stocks and crude oil, the nation’s biggest export, rose. The Standard & Poor’s 500 Index gained 1.3 percent, while the S&P/Toronto Stock Exchange Composite Index, Canada’s main equities gauge, rose 0.1 percent. Crude Gains Crude for February delivery rose 1.2 percent to $78.95 a barrel on the New York Mercantile Exchange, after falling earlier to $76.76 a barrel, the lowest level since Dec. 24. Canada’s dollar climbed 22 percent against its U.S. counterpart over the past year. It came within three cents of parity with the greenback in October, the closest since July 2008, the month they last traded on a one-for-one basis. “The persistent strength of the Canadian dollar and the low absolute level of U.S. demand continue to act as significant drags” on the nation’s economic recovery, the Bank of Canada said today in a statement. Policy makers first said in June that the “ unprecedentedly rapid rise” in the loonie could offset improving economic conditions. The U.S. dollar rose today versus 12 of its 16 most-traded counterparts tracked by Bloomberg. The Canadian currency fell against 12. ‘Remarkably Well’ “Given what the Bank of Canada said today, the Canadian dollar held in remarkably well,” said Jonathan Gencher, director of foreign-exchange sales at Bank of Montreal in Toronto. “It seems that even though they did mention the Canadian dollar and the possible drag it has on the economy, it doesn’t really change things. The cynic in me tells me that all the Canadian dollar talk is a stalling tactic.” The central bank has pledged to keep the benchmark interest rate at 0.25 percent through June, barring a change in the inflation outlook. Policy makers said today that inflation won’t return to their 2 percent target until the third quarter of next year. “The impact from the statement is going to be short- lived,” said Paul Ferley, Toronto-based assistant chief economist at Royal Bank of Canada, the nation’s biggest lender. “Going forward, you’re going to get the market trading off economic data like CPI numbers on Wednesday and monetary policy on Thursday.” Canadian consumer prices increased 1.6 percent last month from a year earlier and decreased 0.1 percent from November, a government report will show tomorrow, according to the median forecast of 26 economists in a Bloomberg News survey. The central bank is scheduled to release its monetary policy report on Jan. 21. Leading Indicators The Canadian currency briefly pared losses earlier after a Statistics Canada report showed the nation’s index of leading economic indicators posted its biggest gain in almost 27 years on household spending, housing and stock market gains. The gauge climbed for a seventh straight month in December, gaining 1.5 percent. The loonie will weaken to C$1.04 by the end of this quarter, according to the median of 28 forecasts in a Bloomberg survey of economists. To contact the reporters on this story: Allison Bennett in New York at abennett23@bloomberg.net; Chris Fournier in Montreal at cfournier3@bloomberg.net

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