A 73-cent Dollar
CBJ — The loonie has taken a major swoon lately, and it’s now hovering around the 73-cent plateau. That may bring a smile to the face of exporters but it has financial analysts concerned about just how low it might go.
At the centre of the free-fall is the continued global lag in oil prices, which has now hit a low of about $38 per barrel.
A barrel of West Texas Intermediate is trading right around the $38 mark, which is a level not seen since the depths of the global recession in 2008 and into 2009 when oil bottomed out at just under $34 per barrel. But those were under vastly different circumstances. OPEC’s continued insistence to flood the market with excess oil continues to drive down prices. It’s all part of an effort to get U.S. producers to halt fracking techniques, which they’ve done as a method of making the U.S. energy self-sufficient. Such a plan works well only to a point. Once a barrel of oil is below $60 it’s believed producers of shale gas and fracking lose money. It’s now just a matter of which side blinks first.
The loonie has dropped by more than 15 per cent in the past year compared to the U.S. dollar as the American economy continues to show signs of decent recovery.