Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Canadian dollar closes at 4 1/2 year low amid emerging market concerns

Canadian dollar coins, or Loonies, are displayed on a map of North America January 9, 2014 in Montreal. THE CANADIAN PRESS/Paul Chiasson

Enlarge Image

Canadian dollar coins, or Loonies, are displayed on a map of North America January 9, 2014 in Montreal. THE CANADIAN PRESS/Paul Chiasson

TORONTO - The Canadian dollar closed at a 4 1/2 year low Monday as the loonie was caught up in concerns over emerging markets' currencies.

The loonie had started out positive but finished the session down 0.32 of a cent at 89.99 cents US, after going as high as 90.65 cents US. It was its first close below 90 cents since mid-July 2009.

Traders looked to an interest rate announcement Wednesday by the Federal Reserve to see if the U.S. central bank will launch another round of cuts to its massive monthly bond purchases.

The Fed started reducing its bond purchases this month by US$10 billion to $75 billion and analysts expect it to further cut the purchases by another $10 billion a month.

The quantitative easing had flooded emerging markets with cheap money, but now those funds are drying up and putting severe pressure on several emerging market currencies. The worry is the problems in countries such as Turkey, Argentina and South Africa could spread to other markets.

The Turkish lira hit a record low of 2.39 per U.S. dollar on Monday before recovering to 2.32 per dollar after the central bank said it would hold an emergency policy meeting on Tuesday. Analysts say a rate hike is likely.

The South African rand fell another 0.3 per cent to 11.13 per U.S. dollar, and Russia’s ruble fell 0.5 per cent to 34.68 per dollar.

On the economic front, data showed sales of new homes in the U.S. dropped seven per cent in December to a seasonally adjusted annual rate of 414,000. But even with the pause at the end of the year, U.S. home sales for all of 2013 climbed to the highest level in five years.

Investors will also digest the latest growth figures from Canada and the U.S. this week.

Economists expect Statistics Canada to report Friday that gross domestic product grew by 0.2 per cent in November amid rising manufacturing sales. That would be a slight dip from 0.3 per cent GDP growth in October.

Winter weather is expected to have taken a toll on December GDP growth, but CIBC senior economist Peter Buchanan said that "a 0.2 per cent rise in November, and comparable decline in the final month of the year, would leave fourth-quarter growth headed for a 2.7 per cent annualized increase."

In the U.S., it is expected that data Thursday will show fourth-quarter economic growth came in at an annualized pace of 3.2 per cent, following a 4.1 per cent rise in the previous quarter.

On the commodity markets, the March crude oil contract on the New York Mercantile Exchange also shed early gains, losing 92 cents to US$95.72 a barrel.

The February gold bullion contract was down 90 cents to US$1,263.40 an ounce while the March copper contract was down a cent at US$3.26 a pound.

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Submit a Random Act of Kindness
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates