Canadian dollar plunges to 11-year-low

Ottawa, December 18 (CINEWS): As US interest rates rose and crude oil prices plunged, so did the loonie. The building oil supplies and consequent surplus spelt doom for the Canadian dollar which fell to an 11-year low. The loonie fell below the 72-cent US mark for the first time since the spring of 2004. It was reportedly trading at 71.72 cents US at 10:45 a.m. ET.
Oil prices had already hit record lows on Monday at approximately $35 (US), they seemed to rebound slightly on Tuesday but fell again Wednesday as the US crude oil supply figures were released.
Analysts were expecting the supplies to drop by 1.5 million barrels but contrary to expectation it rose by 4.8 million barrels last week.
This is bad news for Canadians who shop and vacation in the US as well as business in the states that Canadian tourists frequent.
The only welcome news is the proposed reduction in gas prices for home heating as a consequence of the fall in natural gas prices to a 16-year low.
The scenario is not expected to get better with US interest rate hike. The old adage when the US sneezes, Canada catches a cold is about to play out.
According to Bloomberg, forecasters project more U.S. central bank rate increases next year while they expect the Bank of Canada to keep its own rate at 0.5 percent through to 2017. That would give the U.S. its biggest interest-rate advantage over Canada since the mid-2000s.

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