The Canadian dollar touched its lowest point in over a week after the Bank of Canada maintained a neutral bias on interest rates and said a forecast pickup in business investment has been slow to materialize.
The currency fell against most of its major peers as the central bank held its benchmark interest rate at 1 percent for the 29th straight policy meeting, as forecast by all 18 economists in a Bloomberg News survey. The economy’s recovery “hinges critically” on a shift in demand from indebted consumers to exports and business investment, which will be aided by a weaker Canadian dollar and rising U.S. orders, the bank said in a statement today.
The loonie, as the Canadian dollar is known for the image of the aquatic bird on the C$1 coin, depreciated as much as 0.4 percent to C$1.1024 per U.S. dollar, the weakest since April 4, before trading at C$1.1007 at 11:19 a.m. in Toronto, down 0.3 percent. One loonie buys 90.85 U.S. cents.
The Canadian dollar has been the worst-performing of the greenback’s 16 major peers this year as shifts in the Bank of Canada’s outlook prompted bets it would signal a need for easier monetary policy to spur inflation and boost exports.
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