Canadian dollar remains below 70 cents US

The loonie was at 69.57 cents United States shortly before noon but had been as low as at 69.46 cents at midmorning.

Sylvain Charlebois, the report’s lead author, said for every US cent the dollar drops, foods that are imported likely increase one per cent or more.

The currency has been sinking for some time as a result of lower oil prices and other factors and fell below 71 cents USA for the first time in more than a decade last Wednesday.

The loonie slipped to a 13-year low on Tuesday, but one Canadian economist says there is no need to hit the panic button. “There are also challenges”, he said in Toronto, where he held pre-budget consultations.

“We believe that the plan that we should be following is the plan we’ve laid out for Canadians. we know that investing in growing economy is what Canada’s voted Canadians voted for and we are absolutely committed to continuing down that plan.” says Bill Morneau.

The February crude oil contract settled at US$30.44 a barrel, down 97 cents from Monday’s close, after dipping below US$30 in earlier trading.

Patrick Leblond, an expert in finance at the University of Ottawa, said recent volatility in stock markets around the world and global economic uncertainty is causing people to flee for the safe haven of U.S. Treasury bonds. The metals and mining sector was the biggest loser on the TSX, dropping more than three per cent. Industrials stocks lost roughly 2.7 per cent.

NY markets were sharply higher after even larger losses the previous session that drove the S&P 500 index into correction territory, or a drop of 10 per cent or more from its peak.

The Dow Jones plunged 364.81 points to 16,151.41, while the S&P500 shed 48.40 points to 1,890.28 and the Nasdaq declined 159.86 points to 4,526.06.

Energy stocks were a source of strength as the February contract for benchmark crude oil rose 99 cents to US$31.47 a barrel.

The situation is forcing Canada’s central bank to cut interest rates and the new liberal government to accept deficit spending. “It’s a sign that the economy is doing well, and that, in the long run, is positive for corporate earnings and should be good for stocks”.