The Canadian dollar fell to a four-month low vis-à-vis the U.S. currency after the Bank of Canada announced that it is holding its trendsetting overnight interest rate at its current level of 4.50%.
The Canadian dollar traded at 72.54 U.S. cents immediately after the central bank’s announcement, its weakest level in more than five months.
As was widely expected among economists and traders, the Bank of Canada held its key interest rate at 4.50% based on recent data that shows the Canadian economy is slowing and inflation is falling.
Some economists said that a weakened Canadian dollar might not be a bad thing as a lower currency could create a shift in demand away from U.S goods and services toward Canadian ones.
However, a recent poll by the Reuters News Agency found that a majority of economists expect the Canadian dollar to strengthen this year, boosted by strong commodity prices and an economic recovery in China.
The yield on benchmark two-year Canadian government bonds declined more than 2.5 basis points to 4.30% after the Bank of Canada’s latest interest rate decision
