The Canadian dollar continued its tumble, falling below 80 cents compared to the U.S. dollar for the first time since 2009.
The currency ended the trading day at 79.8 cents on Wednesday, Jan. 28. That’s down 7 cents in the past month and 15 cents since July, according to data from the Bank of Canada.
The loonie, which is getting the label “swoonie” by some in the Canadian media because of its fast decline, has weakened because of several factors. The main factors include low crude oil prices and a strengthening U.S. dollar. The Bank of Canada also recently lowered the benchmark interest rate target from 1 percent to 0.75 percent.
With those factors in place, the Canadian dollar is expected to further weaken. A report by TD Economics released earlier this week is forecasting that the Canadian dollar will drop to 75 cents.
The strength of the Canadian dollar tends to go in cycles, and Canada has had a long stretch with a strong currency. Except for a five-month period during the global financial meltdown in late 2008 and early 2009, the loonie has been above 80 cents since June 2005. Its peak during this run was in November 2007, when the Canadian dollar was $1.07 compared to the U.S. dollar.
This weaker Canadian dollar is expected to continue impacting cross-border shopping. Earlier this week The Vancouver Sun reported that the number of Canadians traveling into Whatcom County at the Peace Arch crossing was down 7.6 percent in December compared to a year before, when the loonie was at 94 cents.
One upside of the weaker Canadian dollar for Whatcom County’s economy is that it creates opportunities for Canadian companies to expand into the U.S. market by opening a facility in this area. Entering this market can be attractive for Canadian companies because they would be paid in U.S. dollars for goods sold.