A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto in this January 23, 2015, file photo. The Canadian dollar pared earlier session losses against its U.S. counterpart on Tuesday, strengthening after data showed January growth was better than feared. REUTERS/Mark Blinch/FilesMARK BLINCH/Reuters
The loonie plummeted to post-recession lows on Wednesday, falling as low as $77.20 cents US at 1:35pm before closing at $77.39 cents, down 1.1 cents or 1.4% as the Bank of Canada cut its benchmark interest rate to 0.5%.
The loonie's decline marks a six-year low against the US dollar as Canada's central bank slashed the main lending rate for the second time this year as well as its GDP growth projection, which it now places at a little over 1%.
The Bank of Canada monetary policy report suggested today that the economy had contracted at a pace of 0.5 percent in the second quarter. The B of C lowered expectations for the first half of the year due to the ongoing drubbing of oil prices in light of waning global demand and the impact of the newly inked Iran nuclear accord. The deal will lift international sanctions on Iranian oil, which experts expect to flood an already oversupplied market.
In a statement, the Bank of Canada acknowledged Canada's changing economic landscape and cited "downgrades of business-investment plans in the energy sector" for the stimulus measures and the need to return the economy to "full capacity."
Despite a reported drop in crude supplies by the US Energy Information Administration, oil futures also turned lower.
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