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A Canadian dollar coin, commonly known as the loonie, is pictured in this January 23, 2015, file photo. (MARK BLINCH/REUTERS)
A Canadian dollar coin, commonly known as the loonie, is pictured in this January 23, 2015, file photo. (MARK BLINCH/REUTERS)

Canadian dollar sinks below 71¢ as analysts warn of further corrosion Add to ...

The Canadian dollar tumbled below the 71-cent mark today, continuing its downward trend and heading for what some analysts believe will be a bottom of about 70 cents (U.S.).

The currency has been hammered generally by the oil shock, poor prospects for domestic economic growth and the different paths being taken by the Federal Reserve and the Bank of Canada.

Global uncertainty drives loonie to its lowest level since 2003 (BNN Video)

The “price action is not surprising given the current volatility in the market, and growth currencies like the loonie could be at risk,” warned Bipan Rai, director of foreign exchange and macro strategy at CIBC World Markets.

The currency touched a low of 70.88 cents today, and ended the day at 71.02 cents

“With mounting tensions between Saudi Arabia and Iran, sellers are likely to conquer more land,” London Capital Group analyst Ipek Ozardeskaya said of the loonie and referring to the declining price of oil.

The loonie is at lows last reached in August, 2003, noted Bank of Nova Scotia, driven down by the oil slump and “the broader market tone of risk aversion.”

Analysts see the loonie eroding further still, though picking up later in the year.

“The Canadian dollar (CAD) is liable to weaken further in 2016, although a lot of bad news is already factored into the exchange rate,” Bank of Nova Scotia said in a new forecast late yesterday.

“The CAD dropped more than 16 per cent against the [U.S. dollar] in 2015 and has fallen more than 30 per cent over the past three years,” Scotiabank forecasters added.

“Low oil prices and sluggish domestic growth will count against the CAD in the coming year but we think longer-term investors may start to see the CAD as offering better value if spot reaches the 1.42/1.45 range in the next few months.”

By that, the forecasters mean a loonie worth between 69 cents and just shy of 70.5 cents.

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