The economists at one of the country’s big banks are saying the Canadian dollar is likely headed lower.
Anyone planning or taking a winter vacation south of the border already knows the pain of converting Canadian dollars into American. It hurts. But it is going to get worse, according to a report from CIBC.
The bank says the Canadian economy can’t support a growth track without depreciating the currency further to give exporters a leg up. They say that consumers are tapped out, having borrowed themselves into a situation where they have to pull back. So, if we are going to generate growth it will come from exports, but we’re not competitive or productive enough to compete with our U.S. counterparts.
As a result, we should expect the dollar to fall to levels we haven’t seen in 15 years, back when it was a good day if we hit 70 cents.
With the consumer tapped out, our growth will slow. This will keep the central bank from raising interest rates – something that strengthens our dollar – prompting the bank to forecast our currency’s erosion.