OTTAWA — As the loonie continues its precipitous slide, consumers can expect to start seeing an increase in their grocery spending.
While the Canadian dollar saw a slight rebound Thursday, it continues to trade at lows not seen since the days of the pandemic.
The dollar weakened 3% throughout the month of October, it’s largest monthly decline since Sept. 2022.
It closed out the month by sinking below 72 cents US for the first time in four years, down from the 72-to-76 cent range it’s hovered around since the summer.
The dollar was worth only 71.6 cents US by early Wednesday morning, but by Thursday afternoon traded a little over 72 cents.
Ian Lee of Carleton University’s Sprott School of Business told the Toronto Sun that while recent interest rate cuts are partially to blame, there’s a number of key drivers at play in the loonie’s plunge — including gaps between U.S. and Canadian interest rates, and a drop in the price of oil, Canada’s largest export.
“When the price goes down, we get less money coming into Canada for payment for that oil,” he said.
In June 2022, the benchmark West Texas Intermediate (WTI) traded over $120 US per barrel, but as of Thursday afternoon was just $72.21 — recovering from a $69 low on Wednesday.
The dollar’s slump, Lee said, can also be attributed to conspicuous gaps between the Canadian and American economies.
“The Canadian GDP (gross domestic product) is only growing around 1%, while the U.S. is growing at 3%,” he said.
“(Investors) look at Canada and they look at the US, at who’s doing better — and there’s a widespread belief that the American economy is much stronger, and that there’s better opportunities in the United States than in Canada.”
That, he says, makes the Canadian dollar act like something of a financial barometer for investors.
“The market is saying we’re not as attractive,” Lee explained.
And with the dollar already at concerning lows, uncertainty surrounding Trump’s promises of more protectionist trading practices could push it even lower.
“Trump has publicly promised to impose tariffs between 10 and 20%,” Lee said.
“The moment that’s announced, that’s going to tank the Canadian dollar.”
Aside from the obvious impact on those travelling south for the winter, the low dollar will also mean buying imported food and goods will cost us more.
“It will lead to higher prices for everybody who buys anything that’s imported, which is just about all of us,” Lee said.
“We buy food, we buy groceries, we buy blueberries, we buy California wine — people don’t realize how much we buy from the US of agriculture products, so it’ll show up almost instantly in higher vegetable and fruit prices.”
[email protected]
X: @bryanpassifiume