The Canadian dollar, along with the related exchange traded fund, has lagged behind other developed market currencies this year, as the U.S. becomes more energy independent and winter demand for Canadian exports falters.
The Canadian currency has depreciated 4.2% against a basket of 10 developed country currencies this year – it is the worst performer of the group, reports Ari Altstedter for Bloomberg.
The loonie, named after the loon bird depicted on the Canadian dollar coin, has declined 3.1% against the U.S. dollar this year. The currency touched a four-year low of C$1.1279 on March 20 and currently trades around C$1.0959 per USD.
According to the Organization for Economic Co-operation & Development measure of purchasing-power parity, the Canadian dollar is still 11% overvalued relative to the USD.
Canada exports 75% of its goods to the U.S., but the crippling winter storms reduced demand.
“When the U.S. catches a cold, Canada gets the flu,” Camilla Sutton, the chief currency strategist at the Bank of Nova Scotia, said in the article.