Loonie suffers biggest one-day drop since 1962
CTV.ca News Staff
Published Wednesday, March 19, 2008 7:10PM EDT
The Canadian dollar and North American markets took a big tumble Wednesday.
The loonie fell 2.19 cents against the American greenback, its biggest one-day plunge in nearly half a century.
The last time the Canadian dollar dropped so far, so quickly was in May 1962 when then-prime minister John Diefenbaker's government pegged the dollar at 92.5 cents US, plus or minus a cent. It ended trading Wednesday at 98.49 cents U.S.
A drop in oil and gold prices are being blamed for the loonie's decline. The New York Mercantile Exchange's April oil contract dropped by US$4.94 and closed at $104.48 a barrel. Gold also fell 4.8 per cent as the April bullion contract on the NYME closed at $945.30 an ounce. Other metals such as aluminum and copper also took a tumble.
"We've seen a fairly dramatic selloff in gold prices and as well with crude oil... that's put the Canadian dollar on the defensive at the same time,'' said George Davis, chief technical analyst at RBC Capital markets.
BNN's Michael Hainsworth says it's not likely the Canadian dollar will fall any lower.
"Economists say the world economy still needs what we offer and this should be the low end of the loonie's range this year," he told CTV Toronto.
Fears that a bleak American economy would spread globally also sent shockwaves though the markets.
Toronto's S&P/TSX composite index fell 427.32 points to 12,709.38. That eclipsed Tuesday's gain of 184.55 points. The TSX felt the negative effects of declining energy sector.
The Toronto stock market wasn't alone in feeling a pinch Wednesday. U.S. markets also fell sharply following a surge the day before.
New York's Dow Jones industrials fell 293 points after gaining 420 points on Tuesday. Dow Jones closed at 12,099.66. The Nasdaq composite index was also down, closing at 2,209.96, a decline of 58.3 points. The downward trend also continued at the S&P 500 index, which dropped by 32.32 points to close at 1,298.42.
With files from The Canadian Press