The Canadian dollar ended the day at its lowest closing level in more than a decade as falling oil prices, which may have plunged the economy into recession in the first half of the year, resumed their descent.
The currency has been falling since last week when the Bank of Canada cut its benchmark interest rate and forecast two straight quarters of economic contraction, saying the hit from crude oil's collapse was proving to be more severe than expected. Oil prices fell again Wednesday, with the North American benchmark trading below $50 (U.S.) per barrel.
"The economy is in a technical recession," said Mazen Issa, senior foreign-exchange strategist at Toronto Dominion Bank, by phone from New York. "As the data continued to unfold, it became increasingly obvious the economy is continuing to struggle with an oil shock that is much deeper and much more prolonged than previously anticipated."
The loonie, as the currency is known for the image of the aquatic bird on the $1 coin, ended trading Wednesday at $1.3033 per U.S. dollar, or 76.73 U.S cents, the lowest closing level for the currency since September, 2004.
Earlier it fell as low as $1.3053 per U.S. dollar, which was still short of the intraday low point of $1.3065 per U.S. dollar briefly touched in March, 2009, when the economy was last in recession. That day the currency ended the day at $1.3012 per U.S. dollar.
With data already showing the Canadian economy shrank 0.6 per cent between January and March, the Bank of Canada's forecast last week calls for a 0.5-per-cent contraction in the three months ending in June.