The Canadian dollar has fallen to its lowest level since the onset of the Covid-19 pandemic in March 2020 following the shock resignation of federal Finance Minister Chrystia Freeland.
The loonie, as the Canadian dollar is known, has slid a further 0.5% to trade at $1.43 per U.S. dollar, its weakest level in nearly five years.
The Canadian currency has been steadily declining as Canada’s economy slumps and as politicians in Ottawa struggle to come up with a plan to respond to president-elect Donald Trump’s tariff threats.
Earlier this week, Freeland, who had been finance minister since 2020, abruptly resigned with a post on social media claiming that Prime Minister Justin Trudeau wanted to give her another position in his cabinet.
At the same time, the federal government in Ottawa is struggling to develop a plan to counter Trump’s threat to impose a 25% tariff on all goods imported from Canada.
The current political situation is further pressuring the loonie, which had already been declining as the Bank of Canada lowers interest rates.
Implied volatility with the Canadian dollar has spiked in recent days and is now at its highest level in more than a year.
Canada’s currency has declined more than 7% against the U.S. dollar this year and is on track for its worst annual performance since 2018.
Hedge funds have increased their bearish bets against the loonie in recent days, betting on continued weakness in the currency, according to data from the Commodity Futures Trading Commission.
Related Stories
