Canadian dollar drops below 70 cents against US dollar

Washington: The Canadian dollar, known as the loonie, fell below 70 cents against the US dollar, marking its lowest value since March 2020 during the Covid-19 pandemic. According to Bloomberg data, the loonie briefly dipped below 71 US cents this morning before settling at 71.01 cents by noon.

The decline follows a tumultuous week in Canadian politics, with Finance Minister Chrystia Freeland resigning from Prime Minister Justin Trudeau’s cabinet. The drop in the currency’s value has also been attributed to a weak domestic economy and external pressures, including tariff threats from the United States.

US President-designate Donald Trump has proposed imposing a 25% tariff on Canadian goods, a move that could severely impact Canada’s economy. The US dollar has strengthened significantly since Trump’s election victory in November, adding to the pressure on the loonie.

Canada’s Fall Economic Update revealed a $61.9 billion budget deficit, further exacerbating concerns. Additionally, the Bank of Canada has cut interest rates four times this year, with a 50-basis-point reduction in October signaling a shift in focus from controlling inflation to stimulating economic growth.

Douglas Porter, chief economist at the Bank of Montreal, noted that while the US dollar has performed strongly against most currencies, the loonie’s recent decline is more pronounced. “The Bank of Canada’s aggressive rate cuts, Trump’s tariff threats, and the finance minister’s resignation have all