The Canadian dollar is shaping up as an early victim of US President-elect Donald Trump’s latest trade threats against Canada, with damaging effects expected elsewhere in Canadian pocketbooks.
The value of the Canadian dollar fell to a four-and-a-half-year low of 70.53 cents against the US dollar late Monday in the wake of Trump issuing renewed threats via social media to impose 25 per cent tariffs on all imports from Canada and the United States. Mexico.
The Canadian dollar regained some value during Tuesday morning but fell 0.7 percent over the past day and settled below the 71 cent mark by 10 a.m. Eastern.
Despite its rally late last week, the Canadian dollar has largely faltered against its US counterpart since the US elections earlier this month.
Much of this weakness has been linked to Trump’s campaign promises to impose sweeping tariffs on other countries and install other protectionist, “America First” policies – moves that encourage investors to pile into the US dollar, hurting other currencies.
The Canadian dollar is also affected by the spread between the official interest rates of the Bank of Canada and the US Federal Reserve, with a wider gap hurting the Canadian dollar. Signs that the Bank of Canada may rein in the pace of interest rate cuts helped fuel a short-term Canadian dollar rally last week.
Get weekly money news
Get expert insights and Q&As on markets, housing, inflation and personal finance information delivered to you every Saturday.
The weak Canadian dollar is making imports into the country more expensive, threatening to reignite inflation that has slowed in recent months.
The impact of the Canadian dollar’s decline is already being felt at the grocery store, BMO chief economist Sal Guatieri told Global News last week.
Canada is set to import more fresh food from the United States as winter approaches, which Guatieri said means Canadians can expect to pay more as an impending Trump presidency keeps the Canadian dollar “on the defensive.”
– With files from Global News’ Ann Gaviola.
&Copy 2024 Global News, a division of Corus Entertainment Inc.
