How low could the loonie plummet in the face of a possible U.S. rate hike?
One seasoned finance veteran sees the Canadian dollar dropping all the way to 65 cents U.S. in the long-term.
“I see the Canadian dollar over many months getting weaker,” Ken Courtis, chairman at Starfort Investment Holdings and former vice-chair of Goldman Sachs Asia, told BNN on Friday. “I see it going to 65 (cents) to the U.S. dollar.”
The Canadian dollar dipped as low as 76.87 cents U.S. on Friday after Fed Chair Janet Yellen declared the case for higher interest rates has gained strength recently.
“I think [the loonie will] probably strengthen through the end of the year because once the initial reaction to the speech wears off and there’s no hike in September, then the (U.S.) dollar starts to weaken a little bit compared to ours,” he said.
In spite of that, Courtis believes the Canadian dollar is due to plummet in a continuation of the dive that saw the loonie dip below 68 cents U.S. in January.
“Eighteen months ago, when the Canadian dollar was a lot higher than it is now, I was predicting it was going to 68 (cents),” he said. “I think we got a big rebound out of there, out of that low, but I don’t think the downside is over yet.”“Our export sector will profit from the weaker currency but the problem is that when the currency was doped, as the former government bet the country on the tar sands and the dollar went to US$1.10 (in late 2007), it killed off so many Canadian manufacturing companies.”