The Canadian loonie fell to a 13-year low today, as the Bank of Canada held interest rates steady, despite plunging oil prices.
The Canadian dollar has previously been at an 11-year low of under 0.75 against the US dollar, as the country’s economy has been hit by the fall in oil prices. Today, the Bank of Canada announced that it would hold its benchmark rate at 0.5 per cent, citing strong US demand, resilient employment figures and the two rate cuts introduced last year as factors that would help to lead the economy out of its slump. The decision, though, did not go down well with traders.
Data compiled by Bloomberg suggested that the benchmark rate had more than a 50 per cent chance of being reduced.
Immediately following the announcement, the currency reversed its decline, rising 0.4 per cent against the US dollar, but the fall soon resumed, with the currency weakening 0.4 per cent to C$1.4641 per US dolalr. Today’s declines now mark the 14th day of decreases in a way, the longest losing streak the country has seen since 1971, when it scrapped its peg to the US dollar.
The loonie is now at its cheapest level since 2003.
“There’s an inordinate amount of concern in the global markets about the health of the global economy again,” Shaun Osborne, chief foreign-exchange strategist for Bank of Nova Scotia, told Bloomberg. “The line of least resistance for the Canadian dollar is lower.”
Canada’s weak currency, though, has proven good news for investors.
In 2014, Christie’s International Real Estate crowned Toronto as its top prime property hotspot in Canada, with the company noting that the city performed even better in 2015, partly thanks to the favourable exchange rates for overseas investors.
Fuelling sales are Chinese buyers, who are often buying to move their families into the country and live there, drawn by the high living conditions and strong education system.
Toronto saw its million dollar property sales jump 55 per cent in the first half of the year, says Christie’s, with the city on track to pass 100,000 total sales for the whole year – even higher than the 93,000 record set in 2007.
“Canada has it all: Natural beauty, a pristine environment, sizzling culture, political stability, strong employment, educational excellence, an active outdoor lifestyle, and a currency exchange that welcomes the international real estate investor,” comments Christie’s.
“The low value of the Canadian dollar creates a value proposition for international investors.”Google+