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The Canadian dollar is set to remain at depressed levels over the coming months, with analysts in a Reuters poll slashing their forecasts for the currency as the coronavirus pandemic potentially pushes Canada’s economy into a deep recession.

The loonie has plunged more than 8% since the start of the year, with much of that decline coming over the past month, as the coronavirus outbreak interrupted global economic activity and major oil producers began a price war.

Canada’s economy could be hit particularly hard because it is a major exporter of commodities, including oil, and Canadians carry record debt loads.

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“Forecasting is fraught with perils right now as no one really knows how long the virus-related lockdown will last,” said George Davis, chief technical strategist at RBC Capital Markets. “We believe that the Canadian economy will enter a recession in the first half of this year.”

Davis sees second-quarter gross domestic product plunging at an annualized rate of 18% after an estimated 3% contraction for the economy in the first quarter.

The poll of over 30 currency analysts showed they expect the Canadian dollar to weaken only slightly to 1.42 per U.S. dollar, or 70.42 U.S. cents, in three months, from about 1.4175 on Thursday. In March’s poll, the 3-month forecast was 1.32.

But the loonie is then expected to rebound, with strategists forecasting 1.37 in one year.

“We are more optimistic over the longer term for the loonie,” said Hendrix Vachon, a senior economist at Desjardins.

By the summer “the recovery should be strong enough to reduce significantly the level of uncertainty and to fuel demand for currencies such as the Canadian dollar,” Vachon said.

Ottawa is rolling out more than $200 billion in support for Canada’s economy, including direct aid to Canadians, wage subsidies for businesses, loan programs and tax deferrals, while the Bank of Canada has slashed interest rates to nearly zero and launched a large-scale asset purchase program, quantitative easing, for the first time.

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Should oil prices recover, that could also support the loonie.

“Our energy analyst is expecting a decent pick-up when we look towards year-end, with a target of 50 bucks,” said Christian Lawrence, a senior market strategist at Rabobank. “That is CAD positive longer term.”

Oil has recovered some ground since Monday, when it hit an 18-year low at $19.27 a barrel, on hopes that Russia and Saudi Arabia will announce a major oil production cut.

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