The value of the Canadian dollar is already at a historic low. Now, predictions from two top currency forecasters say it will get much worse.
New York-based Morgan Stanley and Australia-based Macquarie Bank are both predicting the dollar will fall below 70 cents U.S. in 2016. The pair both forecast the Canadian currency may even drop to below 69 cents U.S. before the end of 2016.
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The forecast means the Canadian dollar will experience nearly a nine per cent drop in 2016. The Canadian dollar has already lost more than 25 per cent of its value since 2012, and is currently sitting at its lowest value in 11 years.
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One of the main reasons for the drop is the international crash in crude oil prices. Globally, crude oil is down 40 per cent in value since last December. Until this year, crude oil was Canada’s largest export.
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Other reasons for the dismal forecast include interest cuts from the Bank of Canada, a period of recession in early 2015, and a weaker Canadian manufacturing sector. Forecasted decreases in other important sectors, like natural gas and potash, likely won’t help matters.
READ MORE: Loonie headed toward 71 cents US — and could stay there till 2017
Previous forecasts predicted the loonie would lose a significant amount of its value in 2016. Most forecasts had placed it dropping to 71 cents U.S. before the end of the year, but until recently, no major forecast predicted the dollar to drop below 70 cents U.S.
The Canadian dollar currently sits at 75 cents U.S. The currency has not seen a value below 70 cents U.S. since May 2003.
At the current time, one U.S. dollar is worth $1.35 CDN.
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