The loonie hit a 20-month low, one day after the Bank of Canada announced its largest interest rate hike since 1998.
The Canadian dollar traded at a low of 75.62 cents US in early trading, a nearly one-a-half-cent drop from 77.07 cents US on Wednesday.
That’s the lowest level since Nov. 4, 2020.
The currency partially recovered to 76.06 cents US in late-morning trading.
The U.S. dollar, which has been flying high amid the threat of recession, gained further ground against most major currencies primarily due to short-term yields rising following a report Wednesday that the annual inflation rate in the U.S. hit 9.1 per cent in June, the highest in more than 40 years.
Scotiabank chief currency strategist Shaun Osborne says “risk aversion” was dragging the Canadian dollar lower after the Bank of Canada’s bold move.
This report by The Canadian Press was first published July 14, 2022.