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Canadian dollar sinks below 80 U.S. cents

The fall comes as countries' banks around the world lower their interest rates.

By Ed Adamczyk
A Canadian one-dollar coin (CC/ wikipedia.org)
A Canadian one-dollar coin (CC/ wikipedia.org)

OTTAWA, Jan. 29 (UPI) -- The Canadian dollar fell to 79.64 cents against the U.S. dollar Thursday, its lowest point in six years, as crude oil prices fell as well.

Known as the loonie for its depiction of a Canadian loon on its one-dollar coin, the Canadian dollar crossed the 80-cent barrier Wednesday. An unexpected cut in the Bank of Canada's benchmark interest rate last week, and Wednesday's announcement by the U.S. Federal Reserve that no rate hike in the United States should be expected before June because of the relatively strong U.S. economy, set off a decline in the loonie's value.

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Central banks, including those of New Zealand, Singapore, India, China and the European Central Bank have recently cut their interest rates, setting off a currency war as a hedge against deflation. Countries with a dependency on exporting oil, including Canada and Russia, have seen the value of their currencies fall.

"So we're having this overarching theme of these dovish central banks juxtaposed against the Fed," chief currency strategist Camilla Sutton of Bank of Nova Scotia told the Toronto business newspaper The Globe and Mail.

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Bank of Montreal economist Douglas Porter noted the loonie was nearly at parity with the U.S. dollar only two years ago, and the 20 percent drop is the fastest depreciation on record.

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