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Canadian dollar falls to lowest level in almost 2 years

The value of the loonie fell to a near two-year low this week, adding to pressure on Canadians already squeezed by high inflation and the prospect of a global recession.

The Canadian dollar traded at 75.27 US cents on Friday, falling at one point to a near two-year low of 75.15 US cents earlier in the day.

Meanwhile, the World Bank warned on Thursday that countries could head towards a global recession in 2023 as central banks simultaneously raise interest rates in response to inflation – potentially damaging long-term for emerging markets and developing economies.

Lydia Miljan, a professor of political science at the University of Windsor, told CTV National News: “It’s going to be more expensive to buy stuff and your dollars aren’t going to get far.”

“Borrowing costs are higher and that’s obviously going to cause some recessionary pressure.”

Importers will feel the pain of a weaker Canadian dollar more acutely than exporters, who will get a boost by selling their products in US currency, she said.

What’s different this time, Miljan adds, is the possibility of a recession at the same time as high inflation.

She says any financial planner would recommend holding off on any major purchases and starting to pay off debts when interest rates rise.

“The recessions don’t have to be long, but this, along with all the other problems we’ve had this year, I think is the last thing Canadians want to see again,” she said. .

The Bank of Canada this month raised its key interest rate to 3.25%, one of several rate hikes it has undertaken this year as part of a strategy also shared by central banks. other central government applied to slow down inflation.

Analysts say that the US dollar is often seen as a safe haven in times of volatility, with investors depositing their money in US bonds, driving the value of the currency up up.

Russia’s war in Ukraine also continues to have an impact on the global economy.

The low value of the Canadian dollar could also affect food prices, which have also remained high due to inflation.

Sylvain Charlebois, director of Dalhousie University’s Agro-Food Analytical Laboratory, told CTV: “We import a lot of food from abroad during the winter to feed ourselves and if the loonie falls further, it does. will affect the purchasing power of our importers. National news.

“And that will obviously include our main grocery stores and the various resellers that really make sure we have affordable food in stores and in restaurants.”

On the other hand, a recession could lower prices if people choose to spend less money, he said.


With files from CTV News, The Canadian Press and The Associated Press

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